Guide: Set the Right Tick Size and Minimum Order Size for Your token

Two of the most important parameters when launching a token on Solana are tick size and minimum order size. Choosing them correctly directly affects how your token works in the market and how well it performs.

Next, I’ll show you how to set these parameters based on the total number of tokens (token supply) you plan to issue.

But first, let’s break it down piece by piece.

What Is Tick Size?

Tick size is the smallest price increment by which a token price can move. This setting defines how precisely the token can be traded in the market.

A smaller tick size gives you finer price granularity, which matters for tokens with a high value or a large supply.

What Is Minimum Order Size?

Minimum order size is the smallest amount of tokens that can be traded in a single transaction. This setting helps preserve liquidity and makes small trades practical without flooding the market with tiny orders.

How Tick Size and Minimum Order Size Are Related

In the table provided by Smithii, you can see a consistent relationship between tick size and minimum order size, expressed as:

There is a numerical relationship that follows the parameters in the table:

{Tick Size}*{Minimum Order Size} = 10^{-6}

This relationship keeps the market balanced between price precision and trading accessibility, regardless of the total supply of the token.

Why Does Tick Size Get Smaller as the token Supply Increases?

First, there is one concept you need to understand clearly: the value of the token. When we create a liquidity pool, we establish a relationship between a token base and a quote asset.

The quote token is usually Solana or USDC. That is the asset we cannot freely change, because it represents the capital we have available.

What we can fully adjust as we see fit is how many tokens we create for that given amount of Solana or USDC.

The more supply we create for our token, the less each token is worth, because the capital backing it stays the same. In the real economy, the more dollars the U.S. government prints, the less each dollar is worth, since the backing behind it has not grown.

Next, we need to pay close attention to the units used to measure both Min Order Size and Tick Size.

Min Order Size is measured in number of tokens. So if we create high supplies like 10B or 100B, it makes more sense for the required buy amount to involve more tokens, so the order represents meaningful capital and can likely filter out a good amount of bot activity.

Tick Size is measured in Solana, and this is what really matters. If we create a token with a high supply, meaning each token is worth very little, a high tick size in Solana would cause price jumps.

Managing Tick Size and Minimum Order Size Based on Token Supply

Below, I’ll show you how to handle these parameters in each case. You can also check out our guide to building strong tokenomics.

Tick Size and Min Order Size for Low-Supply Tokens (Up to 1M Tokens)

For tokens with a supply of up to 1 million, it is important to use a tick size that provides enough precision given the potentially high value of each token, along with a minimum order size that keeps the token accessible.

Example:

Step 1: Define the Token Supply


Let’s say you decide to launch a token with a total supply of 500,000 (500K) tokens.


Step 2: Choose the Minimum Order Size


To keep the market usable and accessible, you set the minimum order size at 0.05 tokens. This lets users buy and sell small fractions of the token.


Step 3: Calculate the Tick Size


Use this formula to calculate the tick size:


Tick Size = (10^-6) / Minimum Order Size


With a Minimum Order Size of 0.05 tokens:


Tick Size = (10^-6) / 0.05 = 0.00002

For a supply of 500,000 tokens and a minimum order size of 0.05 tokens, the tick size should be 0.00002. This keeps the token price quote precise enough while keeping trades accessible.

Tick Size and Minimum Order Size for Mid-Supply Tokens (Between 1M and 100M Tokens)

For a mid-range supply, you need a balance between price granularity and order size. As supply increases, the value of each individual token goes down, but accurate pricing still matters.

Example:

Step 1: Define the Token Supply

Let’s assume you decide to issue a token with a total supply of 5 million (5M) tokens.

Step 2: Set the Minimum Order Size

To maintain market accessibility and functionality, you decide that the minimum order size will be 0.5 tokens. This allows users to participate in the market without needing to buy or sell large amounts.

Step 3: Calculate the Tick Size

To calculate the tick size, use this formula:

Tick Size = (10^-6) / Minimum Order Size

Given a Minimum Order Size of 0.5 tokens:

Tick Size = (10^-6) / 0.5 = 0.000002

For a supply of 5 million tokens and a minimum order size of 0.5 tokens, the tick size should be 0.000002. This keeps the token price quote precise enough while keeping trades accessible.

Tick Size and Min Order Size for High-Supply Tokens (Over 100M Tokens)

For tokens with very high supply, you need an extremely small tick size so price changes can be meaningfully differentiated, plus a higher minimum order size to keep the market efficient.

Examples:

Step 1: Define the Token Supply

Let’s assume you decide to issue a token with a total supply of 2 billion (2B) tokens.

Step 2: Set the Minimum Order Size

To maintain market accessibility and functionality, you decide that the minimum order size will be 200 tokens. This ensures that transactions are large enough to be meaningful.

Step 3: Calculate the Tick Size

To calculate the tick size, use this formula:

Tick Size = (10^-6) / Minimum Order Size

Given a Minimum Order Size of 200 tokens:

Tick Size = (10^-6) / 200 = 0.000000005

For a supply of 2 billion tokens, with a minimum order size of 200 tokens, the tick size should be 0.000000005. This keeps the token price quote precise enough while still making transactions accessible.

Key Takeaways

A high tick size can create trading issues for your token because price moves happen in large jumps. To set the relationship correctly, use {Tick Size}*{Minimum Order Size} = 10^{-6} and solve it specifically for your token.

If your supply matches the Smithii table, you can use those values as your baseline.