Single Sided Liquidity

Single-Sided Liquidity Provision

The Deep enables seamless single-sided liquidity provision through an automated liquidity management system built on a friendly fork of the ICHI protocol. This system allows you to deposit a single token into any concentrated liquidity pool, removing the need to manually pair assets.

Dynamic Liquidity Management

The system automatically manages and rebalances your liquidity to maintain optimal positioning in response to market conditions. This ensures that your deposit remains protected while maximizing opportunities for earning yield. The rebalancing strategy adapts to different market states to ensure liquidity is always positioned effectively:

1. Healthy State

   • Objective: Maintain liquidity within the optimal range to maximize trading fee accumulation.

   • Action: Concentrates liquidity where most trades occur, earning the highest possible fees.

2. Over Inventory State

   • Objective: Balance excess deposit tokens to return to a Healthy State.

   • Action: Prioritizes selling the deposit token to maintain optimal liquidity levels.

3. Under Inventory State

   • Objective: Restore balance when deposit token inventory is low.

   • Action: Focuses on buying the deposit token and repositioning liquidity.

4. High Volatility State

   • Objective: Mitigate risk during rapid price swings.

   • Action: Distributes liquidity across a broader price range to protect against volatility.

5. Extreme Volatility State

   • Objective: Protect deposits during severe market fluctuations.

   • Action: Locks deposits and requires manual intervention to rebalance the pool safely.

Benefits of Single-Sided Liquidity Provision

• Flexibility Across Pools: Deposit a single token into any concentrated liquidity pool within the Ink ecosystem. This system is compatible with various pools, giving you broad access to DeFi opportunities.

• Yield Earning: Earn trading fees and additional rewards without the need to manage paired assets manually.

• Deposit Protection: Automated rebalancing strategies protect your deposit from impermanent loss and market volatility.

• Ease of Use: Simplifies liquidity provision by handling asset pairing and rebalancing automatically.

By offering single-sided liquidity strategies, The Deep empowers liquidity providers to deploy their assets efficiently while enjoying yield opportunities and robust deposit protection.