In most decentralized exchanges, liquidity providers (LPs) must provide two assets to a liquidity pool. However, Liquidity Book allows for single-sided liquidity, enabling LPs to contribute just one type of asset to a pool, unlocking new types of liquidity strategies. In this article, we explore how to place a single-side of liquidity and the pros and cons of doing so.

Placing a single side of liquidity using Liquidity Book, would typically give you a shape that looks like one of the below:

Single-sided liquidity allows you to stay exposed to just one asset, which is beneficial if you have a strong preference or bullish outlook for that particular asset. It is therefore perfect use of a single side deployment if you are aiming to enter/exit a token in favor of the other token in the liquidity pool.

EG if you have 100 USDC you want to trade that for eg AVAX, you can deposit your 100 USDC and if the market moves in your favor, in this case if the price of AVAX falls relative to USDC, your USDC will convert into AVAX tokens.

While you avoid the risk of impermanent loss from asset pair volatility, you're still exposed to the volatility of the single asset you deposit. In addition, the yields from single-sided liquidity may be lower if you were to compare to a scenario where you are deploying two tokens into a Liquidity Pool. You essentially have to wait for the market price of the assets to change and bring your liquidity into a range, where fees can be accrued.

If you are using a single side for a specific strategy, such as entering or exiting a token, you may have to monitor this process to ensure you can withdraw your liquidity if and when it converts. However, you can automate this using the Limit Orders feature in the 'Orders' tab on the specific liquidity pool page you want to use. Read the guide for how to do that here.

Deploying a single side takes just a few steps and is very similar to deploying a normal or two sided position. Following the guide below.

Enter the Amount of Tokens:

Select Your Liquidity Shape:

Set Your Desired Price Range:

Deploy Your Liquidity:

Review and Manage Your Position:

Examples of how to deploy a single side:

Engaging in providing Liquidity using the Liquidity Book protocol involves risks, including but not limited to impermanent loss, smart contract vulnerabilities, systemic failures, liquidity crunches, regulatory changes, market volatility, and operational errors. Your capital is at risk; only invest funds you can afford to lose. No assurance or guarantee is provided, and LPs assume all responsibility for their investments. Seek independent financial advice as needed.