Hi everyone, we’d like to propose adding a PYTH-USD perpetual market to the dYdX Chain. The Pyth Network (PYTH) is one of the leading pull-based oracle solutions popularly used by many derivatives protocols that require fast oracle price updates.
Summary
Wintermute is proposing to add PYTH-USD to the dYdX Chain.
Motivation & Rationale:
PYTH is the leading pull-based Oracle solution with a market capitalization of $844M and an average daily trading volume of $82.8M since Nov ‘23. With the recent launch of the Pyth DAO and the announcement of the second phase of their airdrop, we think PYTH will be a strong addition to the dYdX Chain and appeal to the user base of the Solana ecosystem. PYTH is currently listed on Binance, OKX, Gate, Bybit, Kraken, etc.
Specification
Using the newly released market listing UI, we are proposing to list PYTH as a long-tail asset given its market cap, age, and trading volume.
Oracles: Binance, Bybit, Gate, Kucoin, Okx, Mexc
Liquidity tier: 2
Initial Margin Fraction: 0.20
Maintenance Margin Fraction: 0.10
For further information regarding market listing parameters, please refer to the docs.
Next Steps
Assuming there is positive sentiment towards this listing, we will proceed with an on-chain vote in the next couple of days.
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PYTH
Chaos Labs supports the addition of PYTH-USD to the dYdX Chain and recommends listing under liquidity tier 2. In line with the criteria for introducing a new market, as detailed in the v4 documentation, we present our analysis and the rationale behind our recommendation for PYTH’s listing.
Analysis
PYTH is currently listed for spot trading on exchanges, including Binance, OKX, Bybit, Kraken, Gate, KuCoin, and HTX, with its launch on November 19, 2023 (CoinGecko). Recent 24-hour Perpetual volumes for PYTH have also recently been north of $283m, showing interest in trading it. With aggregate liquidity of $1.4m within a ±2% range, PYTH’s price stability is deemed robust enough against potential manipulation, qualifying it for listing on the dYdX Chain.
Liquidity Tier Recommendation
PYTH fulfills the requirements for a Long-Tail asset as defined in the dYdX v4 documentation, and, therefore, we suggest categorizing it under liquidity tier 2.
As outlined in the v4 documentation, liquidity tiers specify the margin requirements needed for each market and should be determined based on the depth of the relative market’s spot book as well as the token’s market capitalization.
PYTH aligns the Oracle liquidity requirement at 7 out of 7 Oracle sources, demonstrating liquidity greater than $50k on both sides. Below are the volume and liquidity depth metrics for PYTH:
Given that it meets the Long-Tail criteria, we suggest listing PYTH at a liquidity tier of 2.
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