> For the complete documentation index, see [llms.txt](https://docs.dgswap.io/llms.txt). Markdown versions of documentation pages are available by appending `.md` to page URLs; this page is available as [Markdown](https://docs.dgswap.io/products/pools/v3.md).

# V3

<figure><img src="https://2908584533-files.gitbook.io/~/files/v0/b/gitbook-x-prod.appspot.com/o/spaces%2FcOEar5iisPYFCTK06GBj%2Fuploads%2FKkII3C47W6mrHJu0sFay%2Fimage.png?alt=media&amp;token=473a14c5-adf9-4c6a-a874-518272d98e9e" alt=""><figcaption></figcaption></figure>

DragonSwap V3 introduces LP NFTs, allowing liquidity providers to control how they supply liquidity.

### Concentrated Liquidity

<figure><img src="https://2908584533-files.gitbook.io/~/files/v0/b/gitbook-x-prod.appspot.com/o/spaces%2FcOEar5iisPYFCTK06GBj%2Fuploads%2FK0asfcxfDZv7BVplaih2%2Fimage.png?alt=media&amp;token=48b27a0c-5953-46b7-9f64-0ddb7bcaf5fb" alt=""><figcaption></figcaption></figure>

V3 allows liquidity providers to allocate liquidity within a specific price range, making capital use more efficient.

Example: Instead of distributing $10,000 across the entire price range, a provider can concentrate liquidity within $1.5-$2.0, increasing fee earnings within that range.

### Non-Fungible Liquidity Positions

LP tokens in V3 are issued as NFTs, representing liquidity positions and accrued trading fees. These NFTs act as receipts and provide flexible liquidity management.

### Active Liquidity & Price Ranges

Liquidity earns fees only when market prices are within the provider’s specified range. When prices move outside the range, liquidity becomes inactive but remains secure.