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Adam
@adamtj-xyz
1 / 2 A few questions 1) how are tick spaces determined when deploying a pool? Is there a sort of common number thats just fine for most cases? 2) i understand that the price shifts whenever y / x moves in the tick range. But different pools across all of defi have different ratios. How do
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Haardik
@haardikkk
The tick spacing is determined by the fees charged in the pool for swaps, actually. Fees is represented in basis points (0.01% increments). (fees / 200) = tick spacing (or, tick spacing * 200 = fees) So for a pool which wants 0.3% fees = 3000 bps, tick spacing = 15
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Adam
@adamtj-xyz
Ok this feels a little counter intuitive actually. I'm guessing that the fees on the pool affect the tick spacing because you want to optimize for just how much value lps are extracting on swaps?
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Haardik
@haardikkk
higher fees are generally on less-traded token pairs (to provide some security to LPs in such pools), with highly-traded pairs having low fees highly traded pairs also need small tick spacing to have more granularity in their pricing, and vice-versa as such a correlation is devised between fees and tick spacing
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Adam
@adamtj-xyz
gotcha that makes a lot of sense. so eth <> usdc might be lower but eth <> some newer meme coin is typically higher to incentivize folks to add liquidity and i mitigates impermanent loss
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Haardik
@haardikkk
i wouldnt say it "mitigates" IL since IL is not that straightforward and definitely isnt solved 100% with just a slightly higher fee tier but other than that, yes
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