[DRC] Add WOO-USD to dYdX Chain v4

[BenYorke]

Hi everyone, Ben here from WOO. We’ve been a long-term friend of dYdX, having contributed on the old commonwealth forums and supporting prior to the launch of DYDX (token).

Summary

WOO is proposing to add WOO-USD to the dYdX Chain.

Motivation & Rationale:

WOO is the native token of our ecosystem, which includes centralized exchange WOO X, doing $500m-900m daily. WOOFi is an omnichain swap dex and earn product that is regularly top 10 by volume, and a cornerstone dAPP on networks like Arbitrum, Avalanche, Mantle, Optimism, and other EVM chains. It is the current #4 ranked dAPP on Arbitrum (by monthly active users) according to dappradar.com.

WOO is listed (spot and perps) on many major CeFi exchanges (https://www.coingecko.com/en/coins/woo) including Binance, OKX, KuCoin, Bybit, and many others, with a daily trading volume surpassing $50m. We’ve received investment from many major trading firms, including Wintermute, Kronos Research, Pulsar, and Selini Capital, many of which also trade actively on dYdX. As such, we believe there’d be a lot of volume on dYdX, and we’d be willing to continue supporting the dYdX community and token with growth initiatives and other synergies.

Specification

Using the newly released market listing UI , we are proposing to list WOO as a mid-tail asset given its market cap, age, and trading volume.

Oracles: Binance, OKX, KuCoin, Gate, MEXC

Initial Margin Fraction: 0.10

Maintenance Margin Fraction: 0.05

Next Steps

The proposal is live at Mintscan
We appreciate the community taking time to evaluate and vote on this proposal over the next 72 hours.

[Callen_Wintermute]

Thanks @BenYorke!

We support the listing of WOO on the dYdX Chain. We think it’ll help improve dYdX’s market listing diversity and attract new users.

[chaoslabs]

WOO

Chaos Labs supports the addition of WOO-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 WOO’s listing.

Analysis

WOO is currently listed for spot trading on exchanges, including Binance, MEXC, OKX, Bybit, Kraken, Gate, KuCoin, and HTX, with its launch on October 29, 2020 (CoinGecko). Recent 24-hour Perpetual volumes for WOO have also recently been north of $35m, showing interest in trading it. With aggregate liquidity of $776k within a ±2% range, WOO’s price stability is deemed robust enough against potential manipulation, qualifying it for listing on the dYdX Chain.

Liquidity Tier Recommendation

WOO 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.

WOO aligns the Oracle liquidity requirement at 8 out of 8 Oracle sources, demonstrating liquidity greater than $50k on both sides. It is recommended only to use an HTX feed where alternatives do not exist, so we recommend using the other 7 price sources. Below are the volume and liquidity depth metrics for WOO:

Given that it meets the Long-Tail criteria, we suggest listing WOO at a liquidity tier of 2.

[rspa]

We changed our vote to NO on the current proposal and hope it get’s resubmitted with the appropriate Tier.

[BenYorke]

In response to chaos labs’ point, we suggest that the framework is being overly conservative, when the liquidity actually exists to safely provide users a better trading experience with “mid tier” margin requirements.

The criteria is 8 robust liquidity sources:
WOO is listed with spot and futures on Binance, OKX, Bybit, Gate, KuCoin, WOO X, Bing X, MEXC, HTX, Crpyto.com, Kraken, Bithumb (spot only), Bitget and a number of additional Tier 2 and 3 exchanges, in addition to Uniswap, PancakeSwap, Trader Joe, and WOOFi on chain. It is one of the most widely accessible tokens in this regard.

$50k on each side:
WOO has $100k-300k within +/- 2% on most of those venues. Many top trading firms, including leading MMs on DYDX, also actively trade WOO.

$100m 30 day spot volume:
WOO has around $25m 30d spot volumes, with $100m+ 30day volumes for perpetual futures. Last week, spot volumes peaked at around $80m per day, which would place it just shy of this $100m criteria.

WOO easily meets 2 of the 3 criteria, with the third one being less important from a risk perspective, and dramatically subject to market conditions. From a WOO perspective, the long-tail versus mid-tail classification is less important, but a higher tier would translate to more volume and better user experience on dYdX.

[Govmos]

On behalf of the PRO Delegators’ validator, we will support tier-2 listing which is a lot more appropriate in terms of risk profile. We also note the recent improvement in the market-depth but it is also important to factor in that these metrics mostly vary due to price momentum, which derives from volatility. Looking from the distance, most of the price action has happened during the last two months alone. We consider that a tier-2 listing is a necessary safety procedure until a more durable base is established.

These can easily be reassessed in the future and we will therefore support a tier-1 listing when all the criterias will be valid and confirmed over a more reliable period of time (at least a quarter is required for our basic risk analysis).

We hope the WOO’s team won’t take that adjustment as a punitive response, as it is absolutely not the case. From our standpoint, it relates to basic risk management over volatile market behaviors and does not imply any qualitative review of the token itself. Time will filter out these factors and we will be happy to support the tier raise in a few more months.

Govmos.

[rspa]

Which tier is WOO listed on now? Afaik the poll specified Tier 1. Has this been amended?

[Govmos]

{
  "@type": "/dydxprotocol.perpetuals.MsgCreatePerpetual",
  "authority": "dydx10d07y265gmmuvt4z0w9aw880jnsr700jnmapky",
  "params": {
    "id": 45,
    "ticker": "WOO-USD",
    "market_id": 45,
    "atomic_resolution": -5,
    "default_funding_ppm": 0,
    "liquidity_tier": 1
  }
}

The vote passed with a liquidity tier-1. We need to collectively create a new proposal to update to the correct value. Can you initiate the new vote ?

[rspa]

I’ll discuss with our Nodes team on Monday and get back to you.

[rspa]

We can do it this week. Nodes team is preparing the on-chain vote.

[BenYorke]

We appreciate your response. Currently the newly added markets are lacking on the liquidity front, its impossible to open much of a position. We wouldn’t take an adjustment as a punitive or negative response, however its worth noting that our 30 day volumes have gone up significantly due to market conditions. Either way, we will support.

[rspa]

We are taking longer than initially than expected, because the appropriate functions are less documented than we thought. Will come back to this next week.

@BenYorke

however its worth noting that our 30 day volumes have gone up significantly due to market conditions. Either way, we will support.

We don’t have any personal opinion for or against this. @chaoslabs recommended Tier2, we can leave the decision to token holders. We think this is the most appropriate course of action.