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Ticks

Custom price ranges where you concentrate liquidity in Pools. Ticks enable capital-efficient liquidity provision by focusing assets where trading actually occurs.

At a Glance​

  • Define specific price ranges for your liquidity
  • Earn fees only when price is within your tick
  • Narrow ticks earn higher fees per dollar but require more management
  • Wide ticks earn more consistently but with lower capital efficiency
  • Ticks represented as discrete price points
  • Adjust ticks anytime by modifying position

Concept​

Traditional AMMs spread your liquidity from price 0 to infinity. Most of that liquidity never participates in trades.

Ticks let you concentrate capital in price ranges where you expect trading:

Traditional AMM:
0 ============================================ ∞
(Liquidity spread thin across all prices)

Concentrated Liquidity:
      $1800 [================] $2200
      (Liquidity dense in selected tick)

When price is in your tick, your capital earns fees. When price moves outside, you stop earning until it returns.

How Ticks Work​

Tick Boundaries​

Each Tick has two boundaries:

Lower Bound: Minimum price where your liquidity is active.

Upper Bound: Maximum price where your liquidity is active.

Example:

  • Token pair: ETH/USDm
  • Lower bound: $1,800
  • Upper bound: $2,200
  • Your liquidity is active when ETH trades between $1,800 and $2,200

Tick Width​

Tick width determines capital efficiency and management requirements:

Narrow Ticks (e.g., ±5% from current price):

  • Highest capital efficiency
  • Earn maximum fees when active
  • Risk: Price easily moves outside tick
  • Requires frequent rebalancing

Medium Ticks (e.g., ±15% from current price):

  • Balanced efficiency
  • Good fee earnings with moderate management
  • Suitable for most LPs

Wide Ticks (e.g., ±50% from current price):

  • Lower capital efficiency
  • Consistent fee earnings
  • Minimal management required
  • Suitable for passive LPs or volatile pairs

Multiple Positions​

You can create multiple positions in the same pool with different ticks:

Position 1: $1900 - $2100 (narrow, active management)
Position 2: $1600 - $2400 (wide, passive income)
Position 3: $2000 - $2050 (very narrow, short-term speculation)

This strategy combines high efficiency with risk management.

Choosing Your Tick​

Based on Price Expectations​

Stable Pairs (e.g., USDm/USDT):

  • Use very narrow ticks (e.g., 0.995 - 1.005)
  • Price rarely moves outside
  • High capital efficiency with low management

Volatile Pairs (e.g., ETH/USDm):

  • Use wider ticks (e.g., ±20-30%)
  • Balance efficiency with active time
  • Consider automated rebalancing with Auto-Pools preset configurations

Based on Management Style​

Active Management:

  • Narrow ticks for maximum efficiency
  • Monitor price movement daily
  • Rebalance frequently (economical on MegaETH)
  • Higher potential returns

Passive Management:

  • Wide ticks spanning expected price range
  • Check weekly or monthly
  • Minimal rebalancing
  • Lower but more stable returns

Automated Management: Auto-Pools offers preset configurations that automatically select optimal ticks based on your chosen strategy mode (Bull, Bear, Dynamic, or Static). This eliminates the need to manually choose and adjust ticks while maximizing your active time and fee earnings.

Based on Risk Tolerance​

Conservative:

  • Wide ticks that rarely exit
  • Focus on stable, high-volume pairs
  • Accept lower efficiency for predictable earnings

Aggressive:

  • Narrow ticks for maximum efficiency
  • Willing to rebalance frequently
  • Higher returns but more active management

Ticks and Tick Spacing​

Ticks are defined using discrete price points:

What Are Ticks?​

Each tick represents a 0.01% price change. Tick system allows precise zone definition without floating-point issues.

Example:

  • Tick 0 = Reference price
  • Tick 100 = +1% from reference
  • Tick -100 = -1% from reference

Tick Spacing​

Different fee tiers have different tick spacing:

0.05% Fee Tier: Tick spacing = 10 (0.1% increments)
0.3% Fee Tier: Tick spacing = 60 (0.6% increments)
1% Fee Tier: Tick spacing = 200 (2% increments)

Lower tick spacing allows more precise ticks but increases gas costs for pool operations.

Setting Tick Boundaries​

When creating a position, you specify:

  1. Lower tick (must be multiple of tick spacing)
  2. Upper tick (must be multiple of tick spacing)

The interface handles tick math automatically - you enter prices, it converts to ticks.

Tick Status​

Your Tick can be in three states:

Active (In Range)​

Current price is within your tick boundaries. Your liquidity:

  • Participates in swaps
  • Earns fees
  • Comprises both tokens in proportion to current price

Out of Range (Below)​

Price fell below your lower bound. Your position:

  • Doesn't participate in swaps
  • Doesn't earn fees
  • Comprises 100% Token B (quote token)

Out of Range (Above)​

Price rose above your upper bound. Your position:

  • Doesn't participate in swaps
  • Doesn't earn fees
  • Comprises 100% Token A (base token)

Capital Efficiency​

Capital efficiency measures how much of your deposit actively earns fees:

Traditional AMM:

ETH/USDm Pool
Price: $2000
Your $10,000 deposit actively trading: ~$500 (5%)
Capital efficiency: 5%

Concentrated Liquidity (±10% tick):

ETH/USDm Pool
Price: $2000
Tick: $1800-$2200
Your $10,000 deposit actively trading: ~$9,500 (95%)
Capital efficiency: 95%

Result: 19x more effective liquidity per dollar.

Tick Strategy Examples​

Stable Pair Strategy​

Pair: USDm/USDT
Current Price: 1.0000
Tick: 0.9990 - 1.0010
Width: 0.2%

Rationale: Price rarely exceeds $0.001 variance. Ultra-narrow tick captures most volume with maximum efficiency.

Management: Check monthly. Rebalance only if depeg event occurs.

Blue Chip Strategy​

Pair: ETH/USDm
Current Price: $2000
Tick: $1800 - $2200
Width: 20%

Rationale: Balances efficiency with reasonable active time. ETH typically doesn't move >20% rapidly.

Management: Check weekly. Rebalance if price approaches boundaries.

Volatile Pair Strategy​

Pair: NEWTOKEN/ETH
Current Price: 0.05 ETH
Tick: 0.03 - 0.08 ETH
Width: 100%

Rationale: New token prices swing wildly. Wide tick ensures position stays active.

Management: Check daily. Tighten zone as volatility decreases.

Mean Reversion Strategy​

Pair: ETH/USDm
Current Price: $2000 (oversold)
Tick: $2000 - $2400
Width: 20% (asymmetric, above current)

Rationale: Expect price to revert upward. Position captures fees during recovery.

Management: Close when price reaches expected range. Not a passive strategy.

Rebalancing Ticks​

When price moves outside your tick, consider rebalancing:

Manual Rebalancing​

  1. Remove liquidity from current position
  2. Select new tick boundaries around current price
  3. Add liquidity with adjusted tick
  4. Receive new LP NFT

Automated Rebalancing​

While manual rebalancing gives you full control, Auto-Pools offers preset configurations that automate the entire process:

  • 24/7 monitoring: Continuously tracks price movements
  • Automatic rebalancing: Adjusts ticks when they become inactive
  • Strategy modes: Choose Bull, Bear, Dynamic, or Static based on market conditions
  • Preset configs: Pre-configured strategies optimize tick width based on volatility
  • No manual intervention: Set it once and let it manage your positions
  • Works with existing positions: Uses your current LP NFTs, no need to recreate positions

Auto-Pools makes frequent rebalancing effortless and economically viable, ensuring your liquidity stays active and earning fees.

Rebalancing Costs​

On MegaETH, rebalancing costs:

  • Remove liquidity: ~ $0.003
  • Add liquidity: ~ $0.005
  • Total: ~ $0.008

Ultra-low costs make frequent rebalancing economically viable.

Tick Visualization​

The MegaFi interface displays tick information:

Price Chart: Shows current price, your ticks, and historical price movement.

Liquidity Distribution: Histogram showing where all liquidity is concentrated across price ranges.

Tick Status Indicator: Green (active), Red (out of range), with distance to boundaries.

Expected Fee Earnings: Projected APR based on current volume and your tick position.

Advanced Tick Strategies​

Layered Positions​

Create multiple positions with overlapping ticks:

Position 1: $1950 - $2050 (core, narrow)
Position 2: $1850 - $2150 (buffer, medium)
Position 3: $1700 - $2300 (safety, wide)

Benefits:

  • Core position maximizes efficiency
  • Buffer provides insurance
  • Safety ensures you always earn some fees

Asymmetric Ticks​

Position ticks differently based on bias:

Bullish Bias:

Current: $2000
Tick: $2000 - $2500 (favors upside)

Bearish Bias:

Current: $2000
Tick: $1500 - $2000 (favors downside)

Risk: If wrong, position quickly goes out of range.

Seasonal Adjustment​

Adjust tick width based on market conditions:

Low Volatility Period: Narrow ticks for max efficiency.

High Volatility Period: Wider ticks to stay active.

Consolidation: Very narrow ticks around support/resistance.

Trend: Asymmetric ticks favoring trend direction.

FAQ​

What's the optimal tick width?
Depends on pair volatility and management preference. Start with ±15% for standard pairs.

Can I adjust my tick without removing liquidity?
No. You must remove liquidity and create a new position with different boundaries.

Do I lose fees if price exits my tick?
No. Accumulated fees remain in your position. You just stop earning new fees until price returns.

Should I have one wide tick or multiple narrow ticks?
Multiple narrow ticks often perform better but require more transactions. Wide ticks are simpler.

How often should I rebalance?
When position goes out of range or when rebalancing cost is < 5% of expected additional fees.

Next Steps​

Apply Tick concepts:

Precision capital deployment.