Single-asset liquidity provision

In Crus, LPs have the option to engage in single-asset liquidity provision.

For example

when providing liquidity for the ETH/USDC pair, with the current price of ETH being 1600 USDT.

To maximize their capital efficiency, LPs can set the liquidity range to fluctuate within the current market price range, such as 1500 to 1700.

This means that liquidity will only be provided within this price range. When the market price of ETH falls within the 1500 to 1700 range, LPs can earn trading fees.

However, if the price of ETH experiences significant fluctuations outside the 1500 to 1700 range, the liquidity provided by LPs will be effectively removed from the pool, ceasing to earn fees.

In this case, LPs' liquidity will be entirely shifted towards one asset, and they will end up holding only one type of asset.

When the price of ETH exceeds 1700 USDC, the LP's liquidity will be converted into USDC. However, when the price of ETH falls below 1500, the LP's liquidity will be swapped back into ETH. Throughout this process, LPs can still earn trading fees. Therefore, if users want to buy ETH at a lower price or sell it at a higher price, they can indirectly achieve this through one-sided liquidity provision.