Crypto Gloss

Single-Sided Liquidity

Single-sided liquidity (also called one-sided liquidity provision) is a DeFi liquidity model where a user can deposit only a single token into a liquidity pool — rather than the traditional two-asset paired deposit — with the protocol either automatically converting a portion of the deposit into the paired asset, routing it into a position that minimizes bilateral exposure, or using a specialized pool architecture that accepts one-sided deposits natively. Traditional AMM liquidity provision requires depositing equal dollar values of both tokens (e.g., $1,000 ETH + $1,000 USDC). Single-sided provision removes this constraint, making it more accessible for users who only hold one asset and don’t want to buy the paired token to provide liquidity.

Why Traditional LP Requires Two Sides

In a standard constant-product AMM (Uniswap V2 style), the pool maintains the formula $x times y = k$ where $x$ and $y$ are the reserves of each token. Adding liquidity requires maintaining this ratio — you must deposit both tokens in the exact proportion of the current pool ratio. If the pool is 50/50 ETH/USDC, you must deposit equal dollar value of both.

This creates friction for users who:

  • Only hold one token
  • Don’t want exposure to one of the assets
  • Are a project with a treasury full of their own token but not ETH/USDC

Single-sided liquidity solves this by abstracting away the requirement.

Implementations

1. Zap / Auto-Split (Most Common)

Example: User deposits 2 ETH into a Zapper.fi-style tool targeting an ETH/USDC pool:

  1. Protocol receives 2 ETH
  2. Swaps 1 ETH → $3,000 USDC on Uniswap
  3. Deposits 1 ETH + $3,000 USDC into the pool
  4. Returns LP tokens to user

Downside: Swap incurs slippage + fees. If ETH is the scarce side of the pool, the user also faces price impact. This is a convenience wrapper, not a true single-sided architecture.

2. Balancer Weighted Pools

  • Depositing only ETH into an 80/20 ETH/USDC pool is supported
  • Balancer adjusts the pool weights and charges a fee (the “swap fee”) on the implicit swap that occurs when adding a single asset to a non-100% single-asset pool
  • This fee is earned by existing LPs, not lost by the depositor

3. Uniswap V3 Concentrated Liquidity (Range Orders)

  • Set a range of $3,000–$4,000 ETH/USDC when ETH is at $2,800 → deposit only USDC
  • As ETH price rises above $3,000, the position starts selling USDC for ETH (acting as a limit order)
  • Until the price enters the range, the position is entirely USDC with no ETH exposure

This is called a “range order” — single-sided liquidity that converts as price moves. See: Range Order.

4. One-Sided Stablecoin Pools (Curve)

  • Curve automatically balances via internal swaps at minimal cost (near-zero slippage for same-peg assets)
  • The deposit is “virtually” split across all three assets in the pool
  • LP tokens represent a share of the entire pool

This works efficiently for stablecoin pools because all assets maintain near-equal value. It’s far less efficient for volatile asset pairs.

5. Protocol-Managed Liquidity (Tokemak, Maverick)

  • Tokemak: Users deposit one token; Tokemak pairs it with reactor capital and manages the LP position, including hedging impermanent loss
  • Maverick AMM: Single-sided liquidity modes where the protocol moves liquidity following price, concentrating it on one side

Impermanent Loss with Single-Sided Deposits

Entering a pool with a single-sided deposit doesn’t eliminate impermanent loss — it defers it. Once your token is inside the pool (whether via zap or native single-sided deposit), the LP position behaves the same as a two-sided deposit. The impermanent loss risk is identical after entry.

The only true avoidance of impermanent loss from single-sided liquidity is via:

  • Range orders that haven’t been hit yet (position entirely in one token)
  • Segregated one-sided positions (e.g., Tokemak’s hedged model)
  • Single-asset pools that don’t have a counterpart asset (e.g., liquid staking yield vaults, which are single-asset by design)

When Single-Sided Liquidity is Most Useful

Use Case Why Single-Sided Helps
Project launching a new token Treasury holds project tokens, not ETH; can add liquidity without buying ETH
Retail user wants LP yield on a single holding Owns ETH but not USDC; zap converts and deposits
Concentrated range orders Place a limit-order-like position in Uniswap V3 with one asset
Stablecoin yield optimization Deposit one stablecoin into Curve 3pool

See Also