[DRC] Upgrade the liquidity tier of ZORA-USD and BONK-USD

Proposals
1

We, CLC, develop and operate dYdX Trading Arena, a trading competition platform aimed at amplifying engagement within the dYdX trading ecosystem.

Simple Summary

This proposal seeks to upgrade the liquidity tier of two markets on dYdX:

  • ZORA-USD from Isolated to Long-Tail (enabling Cross Margin trading)
  • BONK-USD from Long-Tail to Small Cap, increasing available leverage from 5x to 10x.

The changes aim to align market settings with user demand, observed liquidity conditions, and competitive offerings on other perpetual DEXs.

Abstract

dYdX Chain v8.0.1 upgrade allows the dYdX community to upgrade markets from Isolated to Cross margin via governance. The dYdX governance documentation suggests the following criteria to determine compatibility of an isolated market with cross-margining:

  • At least two oracle sources with > $1M USD in trading volume each.
  • At least two oracle sources with > $150K depth within 2% of the mid-price.
  • A minimum of four total oracle sources.
  • Availability of at least 30 days of historical data.

Based on these criteria and market activity, we propose to:

  • Upgrade ZORA-USD to Long-Tail, enabling Cross Margin, given high user interest and sufficient liquidity on centralized exchanges.
  • Upgrade BONK-USD to Small Cap with 10x leverage, aligning with leverage offered on other perpetual DEXs.

Motivation and Rationale

ZORA-USD

  • Strong demand signals from the dYdX community and external trading activity.
  • Multiple reliable oracle sources with healthy spot and perp volume on CEX venues.
  • Enabling Cross Margin for ZORA-USD improves capital efficiency for traders while maintaining low liquidation risk.

BONK-USD

  • Other leading perpetual DEXs offer 10x leverage for BONK markets, creating a gap in dYdX’s offering.
  • BONK maintains sufficient liquidity to support higher leverage safely under Small Cap parameters.

Specification

We propose to execute this upgrade by submitting an on-chain proposal that contains the following messages:

  • Updating the liquidity tier of the markets above using MsgUpdatePerpetualParams.
  • Enabling Cross Margin trading by executing MsgUpgradeIsolatedPerpetualToCross.

Next Steps

If there aren’t any objections or concerns, we are planning to submit the on-chain proposal on August 4, 2025.