Uniswap Ticks for Dummies: The Accounting Trick Behind Concentrated Liquidity
If you’ve ever opened a Uniswap V3 or V4 position and seen a chart full of little vertical bars, price ranges, and a mysterious number called a “tick,” you’ve probably felt a small wave of panic. Don’t worry, ticks are one of those ideas that sound intimidating but turn out to be pretty simple once you see the problem they were built to solve.
The Real Problem: Liquidity Stopped Being Constant
In Uniswap V2, liquidity is a constant. Every pool holds a fixed reserve curve (x * y = k), and that liquidity is spread evenly across everypossible price, from zero to infinity. That sounds generous, but it’s wasteful. If ETH is trading around $3,000, there’s basically no chance it trades at $0.01 or at $10 million anytime soon, yet V2 forces your capital to sit idle across that entire range, earning fees only from the tiny sliver of...
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