New research commissioned by crypto aggregator 1inch and conducted via Dune Analytics found that 85% of concentrated decentralized finance liquidity sits unused at any given moment, costing liquidity providers a collective $150 million in foregone fees each year. The primary report was published through a paywalled source, and the 85% figure has not been independently confirmed outside of reporting on the study; it should be treated as preliminary until the full Dune dashboard or an official 1inch release is publicly available. The findings, published July 16, 2026, add quantitative weight to a problem that 1inch has been publicly flagging since late 2025 and raise pointed questions about who is actually bearing that cost.

A Structural Failure, Not a Marginal One

Concentrated liquidity, the model popularized by Uniswap v3 when it launched in 2021, lets liquidity providers (LPs) deploy capital within specific price ranges rather than across the full price curve. The idea was to dramatically improve capital efficiency. In theory, a tightly ranged position can be up to 4,000 times more capital-efficient than an older full-range pool.

In practice, that efficiency depends on active management. When market prices move outside a position's selected range, the position goes dormant. It earns zero fees and is automatically converted into a single asset. Rebalancing costs gas and requires the LP to monitor the market. Many retail LPs do neither consistently.

The Dune research puts a dollar figure on the result: $150 million per year in fees that LPs could have earned but did not, because their capital was sitting idle outside active price ranges. Earlier research presented by 1inch at the Devconnect conference in Buenos Aires in November 2025 estimated that between 83% and 95% of liquidity in top pools is inactive at any given time. That research covered AMM liquidity broadly, spanning Uniswap v2, v3, v4, and Curve, rather than exclusively concentrated liquidity pools. Uniswap v2, for instance, uses full-range liquidity rather than the concentrated model. According to 1inch, only 0.5% of deposited liquidity in Uniswap v2 typically falls within the active trading range, leaving roughly $1.8 billion effectively dormant in that pool alone. Across all major DeFi protocols, according to 1inch's November 2025 research as reported by CoinDesk, the idle capital figure reaches approximately $12 billion.

The problem compounds further when impermanent loss is factored in. Impermanent loss occurs when the value of assets deposited in a pool diverges from what an LP would have earned by simply holding them. Around 50% of LPs end up losing money on a net basis after accounting for impermanent loss, with aggregate deficits exceeding $60 million. That figure is corroborated by independent academic research: a 2021 arXiv paper by Aigner and Dhaliwal found that nearly 50% of early Uniswap v3 LPs experienced negative returns, providing a data point separate from 1inch's own research pipeline. A separate issue, known as just-in-time (JIT) liquidity, has allowed sophisticated actors to insert themselves into pools immediately before large trades, capturing fees that would otherwise go to existing LPs. According to CoinDesk, one Uniswap v3 pool lost more than $30 million in LP profits to this practice, though the specific pool was not identified in the available source material.

Fragmentation makes things worse still. More than 7 million liquidity pools now exist across DeFi protocols and networks. According to 1inch, that fragmentation dilutes capital and reduces routing efficiency across the board.

1inch's Proposed Answer

1inch co-founder Sergej Kunz framed this as a "DeFi liquidity crisis" at the Devconnect presentation in November 2025. His proposed answer is Aqua, a shared liquidity layer under development by 1inch. As the 1inch Blog describes it: "With Aqua, users don't have to lock assets in separate pools. Assets stay in the wallet and can support multiple strategies simultaneously." Assets would not be locked inside individual pools; they would remain in a user's wallet while simultaneously backing multiple virtual trading strategies.

Backtested projections for Aqua suggest yield improvements of up to 5 times compared to standard LP strategies. Those numbers come from internal simulations, not live deployments, and should be treated accordingly until the protocol goes live and produces verifiable on-chain results.

Why This Hits Emerging Markets Harder

India ranked first globally in the 2025 Chainalysis Crypto Adoption Index and second globally by estimated DEX transaction volume, with roughly $338 billion in total crypto value received between July 2024 and June 2025, according to the Chainalysis 2025 Global Adoption Index. That places a significant share of the world's most active DeFi users in a country where retail LP participation is common but sophisticated position management tools are not widely adopted.

The $150 million annual loss figure is distributed across LPs globally. There is reason to believe a disproportionate share falls on retail participants who entered DeFi through mobile-first apps without dashboards to track whether their positions are in or out of range, though this reflects the logical weight of the evidence rather than a directly measured breakdown. Those users are concentrated in South Asia and other high-adoption, lower-infrastructure markets.

In Africa, the dynamic is different but worth watching. Most crypto use on the continent centers on stablecoins and remittances, not active LP provision. Nigeria was projected to reach 1.6 million DeFi users by 2025, according to Statista, but aggregate DeFi revenue there remains modest. The idle liquidity problem is not yet a significant African user problem. It will become one as infrastructure matures and more users move into deeper DeFi layers. One concrete marker of that maturation arrived in April 2026, when VALR, Africa's largest crypto exchange, integrated with Onafriq, connecting its platform to over one billion mobile money wallets across 43 markets. That kind of infrastructure expansion is precisely what could accelerate African users' path into deeper DeFi participation.

High gas fees on Ethereum mainnet remain a barrier for smaller positions, which means low-fee layer-2 networks such as Arbitrum, Base, and Polygon are the realistic entry points for retail participants in emerging markets.

What Comes Next

The Dune report is the latest in a series of public data efforts by 1inch building the case for Aqua ahead of a broader release. Whether the protocol delivers on its efficiency claims in live conditions remains to be seen. What the research establishes clearly is that the current model asks retail LPs to behave like professional market makers while giving them few of the tools professionals use. Automated Liquidity Management tools from providers such as Gamma Strategies, Lynex, and Amplified Protocol represent partial solutions, but they remain largely inaccessible to retail users due to UX complexity and gas costs. Until that gap closes, the idle capital problem will persist and the $150 million annual cost will keep accumulating, mostly on the accounts of users least equipped to absorb it.