Concentrated Liquidity

The ConcentratedLiquidityStrategy deploys vault capital as one Uniswap V3 liquidity position over a bounded tick range. The position is funded by borrowing the vault asset from Morpho Blue against collateral, not by selling into the volatile leg. It is deployed on the Robinhood mainnet fork.

Every counterparty must be allowlisted. Init checks every counterparty against the vault’s TierRegistry, including the Morpho collateral token and the pool’s other token. On the fork, spUSDG (0xde770c84FE66E063336b31737cFE9790f18c4087) and WETH (0x0Bd7D308f8E1639FAb988df18A8011f41EAcAD73) are allowlisted, so the USDG/WETH pool with the spUSDG market works. A different pool or market may need the TierRegistry owner to call setCounterpartyAllowed first; the CLI preflight names each missing address and refuses with CounterpartyNotAllowed.

What happens

Phase	What happens	Who calls
Execute	Pull `collateralAmount` of the vault asset and post it (or its ERC-4626 wrapper) as Morpho collateral. Borrow `borrowAmount` of the vault asset. Swap the declared fraction into the pool’s other token. Mint one position over the fixed range.	Governor
Rerange	Burn, collect and re-mint the approved half-width centered on the current TWAP tick. Never touches the borrow or the collateral.	Anyone, within the approved policy
Settle	Remove all liquidity, collect, convert the other token back, repay the borrow, withdraw collateral, push everything to the vault.	Governor

Batch calls:

Execute: [asset.approve(clone, collateralAmount), clone.execute()]
Settle:  [clone.settle()]

Settlement is all-or-revert. Every step is typed, and a failed settlement is retried. If the proceeds cannot cover the debt, settlement reverts ProceedsBelowDebt and nothing moves.

What the contract enforces

The agent picks the band, the size, the target LTV and the swap split off-chain. The contract enforces only what it can check from live venue state. Each check fails the proposal at init, not the batch at execute.

Check	Error
The vault’s registry resolves and allows the swap adapter, position manager, Morpho, the collateral token, the Uniswap factory and the pool’s other token	`TierRegistryUnresolved`, `CounterpartyNotAllowed`
The factory names the pool as canonical for its own token pair and fee	`PoolNotFromFactory`
The pool quotes the vault asset	`PoolAssetMismatch`
The market lends the vault asset, against the vault asset or an ERC-4626 wrapper of it	`LoanAssetMismatch`, `CollateralAssetMismatch`
The market exists and can fund the borrow	`MarketNotCreated`, `BorrowExceedsLiquidity`
LTV sits at least 5 percentage points below the market’s LLTV	`LtvInsideLiquidationBuffer`
The minted liquidity is at most 10% of the pool’s active liquidity	`PositionExceedsPoolShareCap`
The ticks are ordered and aligned to the pool’s tick spacing	`InvalidTickRange`
Spot is within the configured bound of the TWAP at every mint, rerange and settle	`SpotOutsideTwapBound`

A bad but in-bounds proposal is still possible. Voter and guardian review exists for that.

Reranging

The rerange policy is fixed at init. Voters approve the policy, not each resulting range. A rerange is permissionless once price has travelled the trigger fraction through the half-range, the minimum interval has passed and the count is below the cap. Each rerange costs a swap and realized divergence loss, so the cap (at most 20) is the binding control. At the cap the position stays in its last range and remains settleable.

Tunable after execute

Two values: the settle slippage, which can only be tightened (loosening reverts ImmutableParam), and the settle deadline. The range policy, the swap route and the sizes are fixed.

Propose

sherwood strategy propose concentrated-liquidity \
  --vault 0x... \
  --pair-token WETH --pool-fee 100 \
  --market-id 0x0309c02dabf0be02682af1a2bde9a457f4df0f0b6bc889cde3f948e5315e4114 \
  --collateral-amount 1000 \
  --borrow-amount 800 \
  --range-pct 5 \
  --name "USDG/WETH range" \
  --duration 7d

The CLI runs every _initialize check before sending anything, including CounterpartyNotAllowed and CollateralAssetMismatch. It computes the expected liquidity from V3 liquidity math at spot and the swap split the range needs. Required: --market-id, --collateral-amount, --borrow-amount, a pool (--pool, or --pair-token with --pool-fee) and a range (--range-pct, or --tick-lower with --tick-upper). The full flag list is in Strategy commands.

Risk notes

Liquidation. Nothing relieves LTV between execute and settle. Reranging moves the LP band, never the borrow. The 5-point LLTV buffer is the only on-chain control.
Divergence loss. The position loses against holding when price moves, and each rerange realizes that loss.
Pool depth. The 10% pool-share cap is measured against liquidity at the current tick, not the whole pool.

Addresses

Contract	Robinhood fork (9994663)
ConcentratedLiquidityStrategy template	`0xcba9C84F2d382729D1519c5F7f4a9AAaC075f8B5`
Morpho Blue	`0x9D53d5E3bd5E8d4Cbfa6DB1ca238AEA02E651010`
Uniswap V3 factory	`0x1f7d7550B1b028f7571E69A784071F0205FD2EfA`
Uniswap V3 position manager	`0x73991a25C818Bf1f1128dEAaB1492D45638DE0D3`
UniswapSwapAdapter	`0x54E6A7af53143556973493fDeC9d7837A77c67eF`

Smart Contracts

Strategies

Governance

Concentrated Liquidity

What happens

What the contract enforces

Reranging

Tunable after execute

Propose

Risk notes

Addresses

​What happens

​What the contract enforces

​Reranging

​Tunable after execute

​Propose

​Risk notes

​Addresses

What happens

What the contract enforces

Reranging

Tunable after execute

Propose

Risk notes

Addresses