When swapping through liquidity via a Multi-Hop Swap or a Limit Order, we iterate through the available TickLiquidity to fill the swap order. Liquidity is always iterated through in order of best to worst price (from the taker’s perspective.) For each swap, we completely exhaust the available reserves before moving on to the next tick. For TickLiquidity instances at the same TickIndex they are iterated through in a deterministic order as follows:
  • PoolReserves take priority
  • LimitOrderTranches are iterated through when Pool Reserve liquidity is depleted
  • LimitOrderTranches are iterated through in alphabetical order of their TrancheKey (LimitOrderTranche.Key.TrancheKey.)
When swapping through PoolReserves the proceeds from the swap are added to the reserves on the reciprocal side of the pool. Ie. The output of TokenA swapped through a PoolReserves will be moved to a PoolReserves holding TokenB.

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Example liquidity Placement

DEX Deposits (0 fee): Tick Index Formula\text{Tick Index Formula} Price=1.0001TickIndex\text{Price} = 1.0001 ^ \text{TickIndex} TickIndex=log1.0001(price)\text{TickIndex} = log_{1.0001}(price)
  • Deposit 1:
    Amounts: 10 ATOM 0 USDC. Price: 8 USDC per ATOM. Tick index 2079520795.
  • Deposit 2:
    **Amounts: ** 10 ATOM 0 USDC. Price: 9 USDC per ATOM. Tick index 2197321973.
  • Deposit 3:
    Amounts: 10 ATOM 0 USDC. Price: 10 USDC per ATOM. Tick index 2302723027.
DEX Limit Orders:
  • Limit Order 1:
    Amount: 10 ATOM. Price: 77 USDC per ATOM: Tick index 1964019640
  • Limit Order 2:
    Amount: 10 USDC. Price: 0.140.14 ATOM per USDC: Tick index −19640-19640
Example liquidity iteration
  • Tick Index 1964019640 offers the cheapest ATOM per USDC spent. it yields 11 ATOM per 77 USDC
  • Tick Index −19640-19640 offers the cheapest USDC per ATOM spent. it yields 11 USDC per 0.140.14 ATOM
  • It is visible that iterating left to right will always yield the best price regardless of the token being swapped.

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Example Liquidity Iteration: Swap

Alice Performs a Swap using a Taker Limit Order. She wants to swap 100100 USDC for ATOM at the best possible price.
  1. The first available TickLiquidity holding ATOM is a LimitOrderTranche at tick 1964019640. Since this is a limit order, when swapped through and depleted the liquidity is removed from state and the USDC Alice paid can be later withdrawn by the limit order Receiver
  2. Alice swaps up to 71.2771.27 USDC using this pool before depleting the reserves. This will net her 1010 ATOM for the swap:
AmountSwapped=ATOMAvailable⋅Price=10×1.000119640=71.27\begin{aligned} AmountSwapped &= ATOMAvailable \cdot Price \\ &= 10 \times 1.0001^{19640} \\ &= 71.27 \end{aligned}
  1. Alice still has 28.7328.73 USDC she needs to swap, so we move to the next available tick: 2079520795 This tick offers ATOM at a price of 88 USDC per ATOM and is of type PoolReserve. Any USDC Alice pays for this swap will be placed in the corresponding poolReserves of the Pool (USDC @ Tick −20795-20795 .) Alice swaps the remainder of her USDC here, resulting in an additional 3.53.5 ATOM:
AmountOut=AmountInPrice=28.731.000120795=3.59\begin{aligned} AmountOut &= \frac{AmountIn}{Price} \\ &= \frac{28.73}{1.0001^{20795}} \\ &= 3.59 \end{aligned}
  1. Done. Alice has swapped 100100 USDC for 13.5913.59 ATOM with an average price of 0.1360.136 ATOM per USDC.
NOTE: For the clarity of this example we are assuming that the PoolReserves have a fee of zero. In a real world scenario almost all PoolReserves will have a fee. In a scenario with fees TokenIn will be added to Tick∗−1+(2⋅feeTick * -1 + (2\cdot fee). Learn more about fees in the PoolReserves section.

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Example liquidity Placement Post Swap

Example liquidity iteration We are still displaying the tick liquidity at 1964019640 as a visual aid. In reality this tick is depleted and removed There are different behaviors a taker limit order can take when swapping. for example, here we were not sensitive to Price. Learn more about the order types and their unique behaviors in the Order Types section.