FPSSL
The Fair Single-Sided Liquidity Provision(FPSSL) protocol
The FPSSL protocol is designed to make providing liquidity to crypto markets easier and fairer. It solves the headache of traditional Automated Market Makers (AMMs) by allowing you to deposit only one asset (like just Bitcoin or just USD) while ensuring you get a fair deal on both profits and risks .
Key Benefits for Users
Deposit Only One Asset
The Old Way: Traditionally, you have to deposit two assets of equal value (e.g., $1,000 worth of BTC and $1,000 USD). This forces you to split your capital and hold assets you might not want .
The FPSSL Way: You can deposit only BTC or only USD. You keep your exposure to the asset you prefer .
"Same Pain, Same Gain" (Fairness)
The core mathematical breakthrough of this system is fairness. It ensures that no matter what the price of Bitcoin does (goes up or down), both the BTC depositor and the USD depositor are treated equally in percentage terms .
Equal Fee Earnings: You and your partner earn the exact same percentage return from trading fees .
Shared Risk: If the market moves and creates "Impermanent Loss" (a common risk in liquidity pools), both sides suffer the exact same percentage loss in their own currency terms. One side does not take a harder hit than the other .
Automatic Balancing
You don't need to do complex math. The system automatically adjusts "weights" (your share of the pool) as prices change to keep everything fair. If the price moves drastically, the system recalculates shares so that the fees and costs remain balanced between the BTC side and the USD side .
How It Works Behind the Scenes？
The Matchmaker: When you deposit BTC, the protocol looks for someone depositing USD. It pairs you together to create a complete liquidity position .
Waiting List: If there are too many people trying to deposit BTC and not enough depositing USD, your deposit might go into a "waiting pool" until a match arrives. It works on a first-come, first-served basis .
Withdrawal: When you want to leave, the system calculates your fair share of the pool's value plus the fees you earned, and returns it to you in your original asset type .
Real-World Examples
The document calculates what happens in volatile markets to prove fairness:
If Bitcoin Price Doubles: Both the BTC holder and the USD holder experience the same small percentage of "Impermanent Loss" (about -5.7%), but the high trading fees generated often offset this, leading to a similar net result for both .
If Bitcoin Price Drops 25%: In traditional systems, one person might profit unfairly while the other takes a huge loss. In this system, both parties see the same result (e.g., a +4.1% net return after fees) .
Important Things to Know (Risks)
It is Not "Risk-Free": This system does not remove Impermanent Loss; it simply splits it fairly. You can still have less value than if you had just held the coins in a wallet, though trading fees are meant to compensate for this .
You Still Have Market Exposure: If you deposit BTC, you are still exposed to the price of BTC. This is not a "hedged" or "market neutral" strategy. If BTC crashes, your position value drops (measured in dollars), just like holding regular BTC .
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