[DRC] Reduce Tick Size for Multiple Markets to Improve Tradability

Proposals
1

Summary

This proposal seeks to reduce the tick size across multiple perpetual markets where the current tick size is disproportionately large relative to the market price.

In several markets, tick size currently exceeds 50 bps of the underlying price. In extreme cases, such as USUAL-USD, the tick size is 0.001 while the price trades around 0.0143, meaning a single tick represents approximately 700 bps. This effectively prevents efficient price discovery, as the market can only move in large discrete jumps.

The proposed changes reduce tick sizes to restore normal market functioning, improve price granularity, and enhance liquidity formation.

Motivation

When tick size is too large relative to price:

  • Order book depth becomes artificial and coarse

  • Spread compression is impossible

  • Market makers cannot quote competitively

  • Price discovery becomes inefficient

  • Traders experience worse execution quality

By reducing tick sizes to more appropriate levels, markets can:

  • Support tighter spreads

  • Allow incremental price movements

  • Enable better maker participation

  • Improve overall trading efficiency

The general principle applied here:

  • Markets where tick size > 50 bps of price are adjusted

  • In certain cases, tick size is reduced further based on market demand and liquidity structure

Markets Included

This proposal updates tick size parameters for the following markets:

dydx2
dydx21158×1031 368 KB

Technical Details

This proposal updates the subticks_per_tick parameter for the above CLOB pairs via multiple MsgUpdateClobPair messages.

The full onchain JSON is attached and will be used for submission:

Key characteristics:

  • Authority: dydx10d07y265gmmuvt4z0w9aw880jnsr700jnmapky

  • Status: STATUS_ACTIVE

  • No changes to step_base_quantums

  • No changes to quantum_conversion_exponent

  • Only tick granularity adjustments

Expected Impact

  • Improved order book granularity

  • Reduced minimum spread constraints

  • Healthier maker competition

  • Better execution for traders

  • More efficient price discovery

No risk to protocol security or matching engine stability is introduced. This is a parameter refinement aligning tick sizes with actual market price levels.

Timeline

  • Forum discussion: Immediately

  • Onchain submission: Wednesday

  • Goal: Complete voting before weekend liquidity decline

If anyone has feedback, concerns, or suggestions for improvement, we’d really appreciate you sharing them soon so we can incorporate any adjustments before the proposal goes onchain.

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