What it is
Single-sided liquidity provision lets a user supply liquidity to an automated market maker (AMM) using only one asset, rather than the traditional requirement of depositing two assets in matched proportional value (like equal dollar amounts of ETH and USDC). The pool itself, not the depositor, handles balancing exposure across multiple assets.
How it works
- A traditional two-token AMM pool requires deposits in a fixed value ratio; depositing only one asset isn't possible without first swapping half of it, which costs fees and slippage.
- A single-sided design instead uses a shared pool structure — often called an omnipool or multi-asset pool — where each asset has its own internal balance and weight against a common base asset (frequently a stablecoin or the protocol's native token).
- When a user deposits a single asset, the pool's pricing curve calculates how that deposit shifts the asset's weight relative to the base asset and mints liquidity provider (LP) tokens representing a claim proportional to the deposit's value.
- Behind the scenes, the pool treats the deposit as adding depth to that asset's side of an implicit pairing with the base asset, without requiring the user to also supply the base asset.
- Traders then swap against the pool's aggregate balances, with the pricing formula (often a variant of a constant-product or stableswap curve) computing exchange rates across all assets simultaneously.
- LPs earn trading fees proportional to their share of the pool and can withdraw by burning LP tokens, receiving one or a mix of assets depending on the design and current pool balances.
Why designers use it
- Removes a major friction point for liquidity providers, who no longer need to acquire and hold two assets in the right ratio just to earn fees on one.
- Reduces the up-front cost of providing liquidity, since users skip the swap-and-split step and its associated slippage and fees.
- Lets protocols aggregate liquidity for many assets into shared pools, improving capital efficiency versus fragmenting liquidity across many separate two-asset pairs.
- Broadens the pool of potential liquidity providers to include people who hold only one asset and don't want additional exposure to a second.
Failure modes
- Impermanent loss reallocation: because a single-sided deposit still creates implicit exposure to other pool assets through the shared pricing formula, depositors can experience impermanent loss they didn't expect from what looked like a "safe," one-asset action.
- Oracle or pricing dependency: many single-sided designs rely on external price feeds or internal weight formulas to value deposits fairly; if these misprice an asset, LPs can be diluted or arbitraged against.
- Concentration risk in the base asset: if the base asset that anchors all pairings depegs or loses value, every single-sided pool built against it is affected simultaneously.
- Withdrawal asymmetry: some designs only let LPs withdraw in the base asset or a fixed mix, meaning a depositor who put in only one volatile asset may exit holding a different asset than they intended.
- Complexity obscuring risk: the underlying math is more complex than a simple two-asset pool, making it harder for everyday users to understand what risk they're actually taking on.
What to check before using it
- Understand exactly which other assets your deposit becomes implicitly exposed to through the pool's shared pricing curve.
- Check what price feed or internal formula values your deposit and how manipulation-resistant it is.
- Confirm what asset(s) you'll actually receive on withdrawal, and under what pool conditions that could differ from what you deposited.
- Model impermanent-loss and depeg scenarios for the base asset and other pool constituents, not just the asset you're depositing.
- Review whether the pool has caps, weight limits, or circuit breakers that prevent any single asset from destabilizing the whole shared pool.