Modulis 4 · Concentrated liquidity

7/9

Single-sided LP — a limit order that pays you

Video · 3 min.

Single-sided LP

Darius deposits only USDC into an LP and waits a month, earning nothing because his range sits far below the price. A single-sided USDC LP is like a limit order that pays fees, but only while the price is inside your range. Three monthly scenarios show how a fall below the range hurts.

Narrated, with light music

The full lesson with numbers and rules is below.

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Why do we deposit only USDC?

In our strategies the LP position is single-sided — we deposit only USDC, not a SOL+USDC pair. That changes the entire logic of the position.

Two-sided vs single-sided LP

Two-sided LP: You deposit SOL + USDC. If SOL falls, you take a loss on both legs. If SOL rises, part of your SOL is automatically sold off (you give up the upside).

Single-sided USDC LP: You deposit ONLY USDC, in a range below the current price. It's a way of saying: "I'll buy SOL if the price falls. And while I wait, I collect fees."

How does a single-sided USDC LP work?

Position layout

Price ($)
  ^
  |
  88 ─── Current SOL price ────── Upper bound
  |     ████████████████████████
  |     ████████████████████████  ← Your USDC "works" here
  |     ████████████████████████     and generates fees
  |     ████████████████████████
  64 ─── Lower bound ───────────────
  |
  |     (nothing below this)

The point: Your USDC sits in the $64–$88 range. While SOL trades above $88 the position is out of range: you hold 100% USDC, but you earn no fees at all. Fees only start accruing once the price enters the range — that is, once it falls below $88.

The beginner expectation that never materialises

A concentrated liquidity position earns fees only while the price is inside the range. Not "while you wait", but "while the market is moving through your range".

The practical consequence: if you open a single-sided USDC position far below the current price and simply wait, you will earn exactly $0 — the same as a plain limit order. That is why you set the upper bound at the current price, not far away from it.

What happens as the price moves?

SOL price	Position state	Fees	IL
$100 (above the range)	100% USDC, inactive	None	None
$88 (upper bound)	100% USDC, starts working	Starts accruing	None
$76 (middle)	~50% USDC + ~50% SOL	Accruing	Yes
$64 (lower bound)	100% SOL	Stops	Maximum
$50 (below the range)	100% SOL, inactive	None	Growing

Single-sided LP = a limit order that pays you

Getting paid to wait — with one precise caveat

A plain limit order: "I want to buy SOL at $64." Then you wait. No reward for waiting.

A single-sided USDC LP ($64–$88): "I want to buy SOL somewhere between $64 and $88." And you collect fees — but only while the price is inside your range and the market is moving back and forth through it. You are not paid for waiting above the range; you are paid because your liquidity sits where the swaps happen.

A more accurate analogy: you are not paid for standing in the queue, you are paid for being an open checkout — the income appears when buyers walk past you.

Since 2026 this is no longer just an analogy

Meteora DLMM SOL now offers native on-chain limit orders: your limit order technically BECOMES a concentrated liquidity position and earns fees. It is the same mechanism you just learned, wrapped in a "limit order" button.

One detail to check first: on limit order positions Meteora's protocol fee share is 50/50 (instead of the usual ~5% in a standard pool), so you keep roughly half as much. The economics there differ from an ordinary DLMM pool — check the current terms in Meteora's documentation before committing funds.

Limit order vs single-sided LP

	Limit order (exchange)	Single-sided LP
Income while the price is in range	$0	Fees (~68% APR in this example)
Purchase price	One specific price	A range (an average)
Capital "locked up"	Yes	Yes, but it earns
Smart contract risk	None (on an exchange)	Yes

Range depth: −20% vs −28%

Strategy A: −20%

Current price: $88
Range: $70.40 – $88.00

Advantage	Trade-off
Narrower = bigger fees	Falls out of range sooner
Needs less capital	Needs repositioning more often

Strategy B: −28%

Current price: $88
Range: $63.36 – $88.00

Advantage	Trade-off
Wider = repositioning less often	Smaller fees
Better for long-term positions	More IL if the price crosses the whole range

Worked example — Strategy B

Starting parameters

Parameter	Value
SOL price	$88
LP capital	$3,200 USDC
Range	$64 – $88 (−28%)
Protocol	Orca Whirlpool (Solana)
Fee tier	0.30%
Fees	~~68% APR (~~$5.95/day, snapshot — varies)

This example uses SOL = $88. At the time of writing (2026-09) the market is around $102 — the figures are illustrative and the mechanism does not depend on the price. The ~68% fee APR is likewise an example: real APR moves with pool volume and changes daily — always check the current one in the protocol's interface.

Scenario 1: SOL stays between $80–$88 (one month)

Fees:     $5.95 × 30 = $178.50
IL:       -$30 (small, the price moved down slightly)
Result:   +$148.50
APR:      +55.7%

Good outcome — fees comfortably exceed IL.

Scenario 2: SOL falls to $70 (one month)

Fees:     $5.95 × 30 = $178.50
IL:       -$254 (significant)
Position: ~29% USDC + ~71% SOL
Result:   -$75.50
APR:      -28.3%

Roughly a wash — fees covered most of the IL. At $70 you're close to the lower bound, so the position is already mostly SOL. If the price recovers toward the top of the range, the IL disappears and the collected fees stay.

Scenario 3: SOL falls to $55 (one month)

Fees:     $5.95 × 20 = $119 (only while it was in range)
IL:       -$857 (position is 100% SOL and the price keeps falling)
Result:   -$738

Negative — and far more sharply than in Scenario 2. The price fell only $15 deeper than in Scenario 2, yet the loss grew almost tenfold. That is because below the lower bound your position is already pure SOL (~42.6 SOL, bought at an average of ~$75), so every further drop hits at full force while no more fees accrue. This tail is exactly what options insurance (a put spread) covers — module 5.

IL grows as the price falls deeper into the range → you choose the range depth deliberately (−20% or −28%), not blindly
Price falls below the lower bound → the position becomes 100% SOL → a put spread covers the downside (module 5)
Smart contract risk → you pick a protocol with a track record of audits and a bug bounty (Orca Whirlpool SOL — Kudelski and Neodyme audits, a bug bounty programme), BUT an audit is not a guarantee: in May 2025 Cetus (the same kind of concentrated liquidity protocol, on Sui) lost $223M to a bug in a third-party maths library — in precisely the tick and range arithmetic this lesson teaches. So never put more into a single LP position than you are prepared to lose entirely

Every risk here has a lever. You're not meant to fear it — you're meant to learn how to pick a range and cover the downside.

Why not the SOL side?

You could build a single-sided SOL LP (a range above the current price). But we don't:

Single-sided USDC (below)	Single-sided SOL (above)
We buy SOL cheaper (useful)	We sell SOL higher
SOL stays as collateral	SOL is sold off (collateral gone)
Fits our strategy	Works against the strategy

Single-sided USDC = the backbone of the strategy

Single-sided USDC LP fits our strategies for four reasons:

It adds no extra SOL exposure — we already hold SOL as collateral
If SOL falls — the LP "buys" SOL with a fee discount
Fees offset the borrowing cost — $5.95/day in fees vs $0.77/day in interest
It combines with options — put protection covers the LP's IL

When should you reposition the range?

Situation	What to do
Price is 10% above the upper bound	Consider moving the range up
Price approaches the lower bound (within 5%)	Get ready: close or widen?
Price is below the lower bound	Wait for a recovery, or close
Fees dropped below breakeven	Narrow the range, or close
30+ days with no change	Review whether the range is still optimal

On Solana (Orca/Meteora) repositioning a range costs under $0.01, and on Ethereum it now runs well under a dollar — on any chain you can manage a position actively without gas being a meaningful cost. The real cost of a move is the IL you lock in, not the transaction fee.

Once you've read this table, you'll recognise for yourself when a position is worth moving and when it's better left alone.

Glossary

Term	What it means
Single-sided LP	An LP position with only one token (USDC or SOL)
Limit order that pays	An LP acting as a limit order that also earns fees
Range	The price boundaries within which your money works
Upper/lower bound	The top and bottom edge of the range
Out of range	Price is outside the boundaries — no more fees

Next up: the final lesson of the module — how to collect and reinvest LP income.

Quick check

How does a single-sided USDC LP differ from a plain limit order?

Practice task

0 / 5

Draft a paper single-sided LP plan

Single-sided USDC LP is the backbone of our strategies. Plan a hypothetical position on paper, then try it in the simulator. Takes about 15 minutes.

Do NOT open a real position yet — plan first, then the simulator at /sandbox/3-orca-lp. For real money you are still missing the options insurance layer (module 5).

This is learning, not investing — use only small amounts you treat as tuition.

You just built a single-sided LP plan with an action for every scenario and you know what covers the downside — most people never plan that far.

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