Tick (AMM)
Discrete price boundaries used in concentrated liquidity AMMs (Uniswap v3) to define price ranges for LP positions.
Tick (AMM) — In concentrated liquidity AMMs, a tick is a discrete price point that defines the boundaries of liquidity positions. Ticks divide the continuous price spectrum into small intervals, and liquidity providers set their positions between two tick boundaries. Each tick represents a 0.01% price change from the adjacent tick.
What Is a Tick?
A tick is a fundamental unit of the price scale in concentrated liquidity AMMs like Uniswap V3. The entire possible price range is divided into discrete ticks, each representing a 0.01% (1 basis point) price increment. Liquidity providers specify a lower tick and an upper tick to define the price range of their position.
Ticks are identified by integer indices. Tick 0 corresponds to a price of 1:1 between the two tokens. Positive ticks represent higher prices for token 0, and negative ticks represent lower prices.
How Ticks Work
When a trade crosses a tick boundary, the AMM activates or deactivates the liquidity positions that begin or end at that tick. This is what enables concentrated liquidity: the pool available depth changes dynamically as the price moves through different tick ranges.
Tick spacing varies by fee tier. On Uniswap V3, the 0.01% fee tier has a tick spacing of 1 (finest granularity), the 0.05% tier uses spacing of 10, the 0.3% tier uses 60, and the 1% tier uses 200. Wider tick spacing means LPs cannot set ranges as precisely, but it reduces gas costs for trades that cross ticks.
Why Ticks Matter
Ticks determine the precision with which LPs can control their positions and the gas efficiency of swaps. Each tick crossing during a swap adds computational cost, so protocols balance granularity against efficiency through tick spacing. Understanding ticks is essential for advanced LP strategies that optimize range placement for maximum fee capture.
For traders, ticks affect execution because available liquidity can change at each tick boundary, meaning a large swap may encounter different liquidity depths as it moves through the price curve.
Related Terms
Concentrated Liquidity
A Uniswap v3 innovation allowing LPs to provide liquidity within a specific price range, increasing capital efficiency dramatically.
Read definition DeFi & AMMFee Tier
The percentage of each trade charged as a fee in a liquidity pool; common tiers are 0.01%, 0.05%, 0.30%, and 1.00%.
Read definition DeFi & AMMCLMM (Concentrated Liquidity Market Maker)
An AMM design where liquidity providers set custom price ranges, used by Raydium CLMM, Orca Whirlpools, and Uniswap v3.
Read definition DeFi & AMMPrice Bin
A discrete price bucket in DLMM systems like Meteora where liquidity is allocated with zero slippage within the bin boundaries.
Read definitionFrequently Asked Questions
Common questions about Tick (AMM) in cryptocurrency and DeFi.
Uniswap V3 supports ticks from -887272 to +887272, covering an enormous price range. In practice, only a small fraction of ticks have active liquidity positions. The number of initialized (active) ticks varies by pool.
Yes. With wider tick spacing (e.g., 200 for the 1% fee tier), you can only set position boundaries at multiples of 200 ticks, limiting precision. Narrower tick spacing (e.g., 1 for the 0.01% tier) allows finer range control but is typically only used for stable pairs.
When the current price crosses an initialized tick, the pool activates or deactivates the liquidity positions bounded by that tick. This changes the available depth and can slightly increase gas costs for the trade that crosses the tick boundary.
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