Single-sided liquidity refers to liquidity that only holds one of the two tokens in a pool.
Single-sided liquidity happens when the current price of a pool moves outside of the positions set price range due to swap activity.
Additionally, liquidity providers can add single-sided liquidity. They do this by setting their positions price range above or below the current price in a pool.
While out of range, providers can add liquidity using only one of the two tokens in the pool.
Important note: Single-sided liquidity is out of range and does not earn fees until the current price of the pool moves into the set range. This is only possible with concentrated liquidity on Uniswap v3 and v4.
Here is an example of single-sided liquidity:
Here is an example of adding single-sided liquidity with a price range that is above the current price:
Here is an example of adding single-sided liquidity with a price range that is below the current price: