Single sided pools change everything
Here's everything you need to know about @hydration_net 's single sided LP tech
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Single-Sided Liquidity Provisioning in Hydration's Omnipool allows you to contribute just one asset (like DOT or BTC). This innovative approach sidesteps the inefficiencies of traditional AMMs, reducing liquidity fragmentation and capital splitting across multiple pools.
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How It Works:
• Deposit a single asset into the Omnipool.
• The protocol mints H2O balancing the pool by creating synthetic pairs for each asset (TKN:H2O).
• Your liquidity is thus exposed to all assets in the pool, simplifying the process significantly.
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Advantages:
• Simplified Provision: No need to juggle multiple assets.
• Concentrated Liquidity: Enhances capital efficiency by pooling all assets together.
• Impermanent Loss Mitigation : H2O's price correlation reduces IL compared to paired pools.
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Challenges:
• H2O Imbalance: Can occur during withdrawals, but managed via dynamic fees and liquidity restrictions.
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Traditional Paired Pools demand two assets in a 50/50 ratio, with liquidity confined to specific pairs, leading to:
• Liquidity Fragmentation: Less capital efficiency.
• Higher IL Risk: More susceptible to price divergence between assets.
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Here's some performance stats on single sided pools
• TVL in Omnipool has surged to 45M
• Initial LP rewards were over 200% APY, boosting liquidity in Polkadot.
• IL modeling shows a 35% price drop results in only ~2% loss for a 1% weighted asset
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You can start trading and LPing at hydration on polkadot at
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