Quanatee reached out to explain how single-sided liquidity pool positions work for the $DESLOP token. This conversation has been shared with Quanatee's knowledge and consent. A screenshot from Quanatee's initial outreach has been omitted at their request.
Hey POM, i wanted to give you a simple brief of what a single sided LP position looks like. Its idea because you can provide the tokens to the LP without having to front USDC or SOL. The only difference is that you only earn fees from the upside of the token. This is a good trade-off for not having to provide "cash" and aligns with token value.
[Screenshot omitted at Quanatee's request]
Happy to chat here if you're happy for me to screenshot share it all
Or for it to be all shared on my website is probably better
lol this is not so serious
do you know anything about LP, AMM?
I know nothing
but in general, the path to corruption is backroom so I wwant to eliminate the possibility of that
So am going to want everything public i do in crypto as a rule
you dont know how green flag that is
Alright, i know where to start. So in traditional stock markets, you have an order book, bid/ask spread and limit orders?
Crypto didnt start with ANY of that, so we invented this thing called an Automated Market Maker (AMM) which replicates somewhat what a traditional market maker would do in the stock market
If i bought 5 deslop using sol, i bought from a liquidity pool that has deslop/sol. The pool manages liquidity so there is enough across the price range.
who owns the liquidity pool?
Launchpads like pump.fun launch decentralized liquidity pools that are immutable once launched, so some of the risk vectors are mitigated.
There are 2 types of liquidity pools, standard and concentrated. Standard LPs use both tokens in the pair. Concentrated LPs let you choose a price range and can enable single-sided liquidity.
Providing liquidity is kind of like selling your tokens plus earning a fee, but if the price comes back down you can become a buyer again.
Crypto people are 80% idiots. When they see dev selling, they panic. Which is why I hope you'll consider liquidity provisioning instead of direct sales.
That makes sense! And if you were completely transparent about what's happening, would it not in effect be the same as the graph?
The psychological impact is important, and providing liquidity is itself a net positive because crypto is such an illiquid market.
Thank you so much for the explanation! Think will almost certainly do this.
Happy to have helped! Standard LP can also be called Balanced AMM or DAMM. Concentrated LP can also be called Single Sided, CLMM, or DLMM.