Calculate sqrtPriceX96 The initial square root price of the pool as a Q64.96 value for BTC/USDC pool (1 BTC = 20k USDC) in typescript

Question

How can I calculate the sqrtPriceX96 value for the initial square root price of a newly created BTC/USDc pool where 1BTC = 20k USDC and BTC is 8 Decimal and USDC is 6 Decimal.

sqrtPriceX96 is need to createAndInitializePoolIfNecessary function

Answer 1

If you have the blockNumber of when the pool where created you can perfom a call like this:

const slot0 = await pool.slot0({blockTag: blockNumber})

And then

const price = slot0.sqrtPricex96._hex

Or you can do:

const price = 1/20000

And then call priceToSqrtPrice

export const priceToSqrtPrice = (price: number, token0Decimals: number, token1Decimals: number) => {

  const decimalAdjustment = 10 ** (token0Decimals - token1Decimals);
  const mathPrice = price / decimalAdjustment;

  let sqrtPriceX96 = Math.floor(Math.sqrt(mathPrice) * 2 ** 96);
  return BigInt(sqrtPriceX96);
};

Answer 2

You can use a modified version of the encodePriceSqrt utility function in Uniswap/v3-core

Below the calculateSqrtPriceX96 function calculates the sqrtPriceX96 using this modified encodePriceSqrt function.

import bn from 'bignumber.js'
import { BigNumber } from 'ethers'

function encodePriceSqrt(priceRatio: bn): BigNumber {
  return BigNumber.from(
    priceRatio
      .sqrt()
      .multipliedBy(new bn(2).pow(96))
      .integerValue(3)
      .toString()
  )
}

interface Token {
  address: string;
  decimals: number;
}

function calculateSqrtPriceX96(tokenA: Token, tokenB: Token, priceOfTokenBInTermsOfTokenA: number): BigNumber {
  const [token0, token1] = tokenA.address.toLowerCase() < tokenB.address.toLowerCase() ? [tokenA, tokenB] : [tokenB, tokenA];

  let priceRatio = priceOfTokenBInTermsOfTokenA * (10 ** (tokenB.decimals - tokenA.decimals));

  if (token0.address === tokenB.address) {
    // Invert the price ratio if the order of tokens is switched
    priceRatio = 1 / priceRatio;
  }

  const priceRatioBN = new bn(priceRatio)
  return encodePriceSqrt(priceRatioBN)
}

// Usage for 1 BTC = 20,000 USDC
const btc: Token = {
  address: "0xYourBtcTokenAddress",
  decimals: 8,
};

const usdc: Token = {
  address: "0xYourUsdcTokenAddress",
  decimals: 6,
};

const btcPriceInUsdc = 20000.0; // i.e. 20_000 USDC/BTC
const sqrtPriceX96 = calculateSqrtPriceX96(btc, usdc, btcPriceInUsdc);