> For the complete documentation index, see [llms.txt](https://docs.metric.xyz/llms.txt). Markdown versions of documentation pages are available by appending `.md` to page URLs; this page is available as [Markdown](https://docs.metric.xyz/how-pools-work/liquidity-and-bins.md).

# Liquidity and bins

## Definitions

Every Metric pool reads a reference price from its price provider. Liquidity is held in **bins: percentage ranges above and below that reference** (for example +1% to +2%). LPs allocate tokens to these bins.

**Deviation** is how far the pool's current price sits from the reference, before the spread. The reference itself is 0% deviation. In a Metric pool, **deviation** works like the **price in a classic AMM**, except that it is measured relative to the reference.

**Pool price before the spread = reference price × (1 + deviation)**

The position inside the **active bin** gives the exact deviation.

#### Where deviation comes from

At any moment, trading happens in the active bin. The exact deviation depends on how far through that bin the pool currently is:

**Deviation = bin's lower deviation + position fraction × bin width**

For example, halfway through a **+1% to +2% bin** is **+1.5%**, not +0.5%.

## Trading discovers the deviation

Trading moves the position inside the bin and discovers its deviation from the reference in the [provider's quote](/how-pools-work/price-providers.md).

At a given reference, buying the priced asset moves deviation up; selling moves it down. Trades move through bins as liquidity is consumed. More liquidity means less movement for the same trade size.

#### A new reference, the same deviation

At **+1.5% deviation**, a $100 reference gives a $101.50 pool price. If only the reference changes to $110, that price becomes $111.65. **Nobody has to trade for that to happen.** The active bin, the position within it, token balances and LP ownership all stay unchanged**.**

<figure><img src="https://2762670563-files.gitbook.io/~/files/v0/b/gitbook-x-prod.appspot.com/o/spaces%2FyvQVWzbfEJJ8Aelwvxmj%2Fuploads%2F0Ddzpm6NC0sGDZEQSKhs%2Fmetric_bin_position_deviation.png?alt=media&#x26;token=993d8d22-781c-4722-be38-ab61798a6eeb" alt=""><figcaption></figcaption></figure>

## Execution price

The provider's quote is an input. The pool price before the spread is the price at the current position, not the average price a trade gets. A trade moves deviation as it fills, so its average price depends on trade size, liquidity across the bins it crosses, the spread, and any per-bin or notional fee, all applied on top of the provider's reference.

LPs own shares of the bins they fund and earn a share of the spread only where their liquidity is used.

[Provide and manage liquidity](/use-metric/provide-and-manage-liquidity.md)