Single-Sided Liquidity Explained: Provide LP Without Two Tokens
Single-sided liquidity explained: how to provide liquidity with just one token, reduce impermanent-loss exposure, and how JewelSwap's NFT AMM uses single-sided pools on MultiversX.
Providing liquidity in decentralized finance has traditionally meant one thing: bringing two assets to the table in equal value. If you wanted to earn fees in a trading pool, you needed both sides of the pair. That requirement is a real barrier. It forces you to hold assets you may not want, exposes you to impermanent loss on both legs, and complicates the simple act of putting capital to work. Single-sided liquidity changes that equation. It lets you provide liquidity with just one asset, and in doing so it reshapes the risk profile of being a liquidity provider.
This guide explains what single-sided liquidity is, how a single sided liquidity pool differs from a traditional two-sided pool, where one-sided liquidity shows up across DeFi, and how JewelSwap applies the concept inside its NFT AMM/DCA modules on MultiversX. We will cover the benefits honestly and the risks just as plainly.
What single-sided liquidity means
In a classic automated market maker (AMM), a pool holds two tokens, and their relative balance sets the price. To become a liquidity provider (LP), you deposit both tokens in the ratio the pool requires. In return you earn a share of the trading fees generated whenever someone swaps against the pool. This is the model popularized by early AMMs and still dominant across DeFi today.
Single-sided liquidity, sometimes called one-sided liquidity, lets you deposit a single asset instead of a matched pair. You bring one token; the protocol handles the rest of the mechanics. Depending on the design, your single asset may be used to quote only one side of the market (only bids, or only asks), or it may be paired behind the scenes with protocol-supplied liquidity. Either way, the LP experience is simplified: you decide how much of one asset to commit, and you skip the step of sourcing and balancing a second token.
Single-sided vs. two-sided liquidity
The difference is easiest to see through the lens of what you deposit and what you are exposed to.
Two-sided pools require both assets in a pair, for example a token and a base currency. As trades flow through, the pool automatically rebalances between the two. If the market price moves, arbitrageurs trade against the pool until it matches the outside market, and the pool's composition shifts. That shifting composition is the source of impermanent loss: the value of your deposited pair can end up below what you would have had by simply holding the two assets. In exchange, two-sided LPs earn trading fees on continuous, two-way volume and act as full market makers.
Single-sided pools require just one asset. Because you are only committing one side, you are quoting one direction of the market at a time. You might place a ladder of buy orders funded entirely by a base currency, or list a set of assets for sale without depositing any base currency at all. Your exposure is concentrated in the asset you chose to bring, and you are not automatically holding a rebalancing basket of two things. This reframes impermanent loss: with a single asset quoting one side, you are not caught in the classic two-asset divergence in the same way. The trade-off is that you generally are not capturing continuous two-way fee flow the way a full-range two-sided market maker does.
How single-sided liquidity reduces impermanent-loss exposure
Impermanent loss arises when a pool holds two assets and their prices diverge, forcing a rebalance that leaves you worse off than holding. The mechanism needs two moving assets to bite. When you provide liquidity with a single asset that only quotes one side of the book, the automatic two-asset rebalance that drives classic impermanent loss is largely removed from the picture.
That does not make single-sided liquidity risk-free. It changes the shape of the risk rather than eliminating it. If you fund buy orders with a base currency and the asset you are buying keeps falling, you may accumulate a position that is now worth less than the currency you spent. If you list assets to sell and the market runs up after your lowest asks fill, you may have sold into strength below where you could have. These are real directional risks. But they are different from, and often more intuitive than, the two-sided divergence loss that catches many first-time LPs off guard. The honest framing: single-sided liquidity trades one form of exposure for another, and for many providers the one-sided version is easier to reason about and control.
Where single-sided liquidity appears in DeFi
One-sided liquidity has grown popular across DeFi for a simple reason: it lowers the barrier to participating. Concentrated-liquidity designs let providers commit capital within a chosen price range, and in some configurations that means depositing effectively one asset near the edge of a range. Lending markets are arguably the original single-sided venue: you supply one asset to earn yield, no pair required. Liquid staking and staking-style vaults also let you commit a single token to earn a return. The common thread is that removing the two-token requirement makes providing liquidity accessible to people who hold, and want to keep holding, just one asset. For a broader primer on how these open, permissionless financial products fit together, Ethereum's own introduction to DeFi is a solid, vendor-neutral starting point.
How JewelSwap uses single-sided liquidity for NFTs
JewelSwap brings the AMM idea to a place it rarely reaches: NFTs. Its NFT AMM/DCA modules on MultiversX introduce an automated market maker model designed for an NFT marketplace, letting users trade and exchange NFTs using liquidity pools, similar to how you would swap cryptocurrencies on a regular DEX. The result is a user experience comparable to token swapping on platforms like xExchange or AshSwap, but the asset being priced is an NFT collection rather than a fungible token. If you are new to the concept, our companion piece on the NFT AMM/DCA modules and trading NFTs like tokens walks through the full flow.
JewelSwap supports both two-sided and single-sided liquidity pools. Two-sided pools facilitate classic NFT-to-EGLD trading pairs, where the pool creator sets both buy and sell orders and earns a trading fee as a market maker. Single-sided pools serve dollar-cost-averaging strategies without the two-asset impermanent-loss exposure.
Buy pools and sell pools
On JewelSwap, single-sided pools come in two forms, defined from the pool creator's perspective:
- Buy pools: you provide EGLD to place multiple purchase bids. It is called a buy pool because you, the pool creator, want to buy NFTs. Buy pools use decreasing prices as they fill.
- Sell pools: you provide the NFTs you wish to sell. Sell pools use increasing prices, and per the documentation the price adjusts upwards only after each NFT is sold, following the chosen delta pattern.
Pricing is arranged automatically by the AMM using delta parameters, which can be exponential (percentage-based) or linear (fixed amount). The documentation gives a worked example of a buy pool with an exponential delta: the AMM arranges five buy bids at prices of 5 EGLD, 4.5 EGLD, 4.05 EGLD, 3.645 EGLD, and 3.2805 EGLD. Each bid steps down by the delta, so your capital buys progressively cheaper as the market moves toward you. A sell pool works in the opposite direction, stepping prices up only after each NFT sells.
Why this is dollar-cost averaging
This laddered structure is what makes single-sided pools a DCA tool. Rather than buying or selling an entire position at one price, the pool strategically spreads the purchase or sale of NFTs over time, reducing risk by minimizing the impact of NFT price volatility. A buy pool quietly accumulates as prices fall through your ladder; a sell pool distributes as prices rise through your asks. You automate an investment strategy according to predetermined price levels, and you do it with a single asset on one side of the market.
Fees
According to the documentation, JewelSwap's 1% platform fee is deducted from pool creator profits rather than from trading volume. In two-sided pools, participants also earn EGLD trading fees as market makers, and the creator can set their own trading fee as a percentage of each transaction. You can read the primary source on the single-sided liquidity pools documentation.
The risks, stated honestly
Single-sided pools reduce the classic two-asset impermanent-loss dynamic, but they do not remove market risk. JewelSwap's own documentation is direct about this. Impermanent loss occurs due to the price fluctuation of your assets after they are deposited, and it is most relevant to two-sided pools where automatic rebalancing can leave you EGLD rich or NFT rich. LPs can still profit even with impermanent loss as long as the amount lost is less than the fees earned, so you must weigh impermanent-loss risk against expected fee income. That risk intensifies in volatile markets.
For single-sided pools specifically, the exposure is directional. A buy pool that keeps filling as a collection craters leaves you holding NFTs bought above the new floor. A sell pool that empties into a rally means you sold below where the market went. NFT markets are also less liquid and more sentiment-driven than major token markets, so floor prices can move fast. Provide only what you can commit through a full price cycle, and choose your delta and price range deliberately.
Frequently asked questions
What is single-sided liquidity in simple terms?
It is providing liquidity to a pool with just one asset instead of a matched pair of two. You commit one token, the protocol handles the market-making mechanics on one side, and you skip the step of sourcing and balancing a second asset.
How is a single sided liquidity pool different from a two-sided pool?
A two-sided pool needs both assets in a pair and rebalances between them as trades flow, which creates classic impermanent loss but earns continuous two-way fees. A single-sided pool needs one asset and quotes one direction of the market at a time, concentrating your exposure in the asset you chose.
Does one-sided liquidity eliminate impermanent loss?
No. It reduces the two-asset divergence that drives classic impermanent loss, but it introduces directional risk instead. If the market moves against the single side you are quoting, you can still end up worse off than holding. It changes the shape of the risk rather than removing it.
How does JewelSwap use single-sided liquidity?
JewelSwap's NFT AMM/DCA modules on MultiversX let you create single-sided buy pools (deposit EGLD to bid on NFTs at a descending price ladder) or sell pools (deposit NFTs to sell at an ascending ladder). This automates dollar-cost averaging into or out of NFT collections without the two-asset impermanent-loss exposure.
What is a buy pool versus a sell pool on JewelSwap?
A buy pool is funded with EGLD and places multiple purchase bids at decreasing prices because you, the creator, want to buy NFTs. A sell pool is funded with NFTs and lists them at increasing prices, adjusting upward only after each NFT sells.
Is JewelSwap available on chains other than MultiversX?
JewelSwap operates on MultiversX, Sui, and Radix. The NFT AMM/DCA modules described here run on MultiversX. Other products, such as liquid staking and yield farming, span the supported chains.
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