Inventory-Skewed Grid Market Making with Short-Term dYdX Orders

Summary

This tutorial describes a grid market-making strategy for dYdX v4. It places buy and sell limit orders at geometrically spaced prices around the mid, then shifts the full grid according to net inventory: a long position moves quotes lower, while a short position moves them higher. A hard position cap and projected exposure checks limit accumulation, and a price-move threshold controls when open orders are replaced. Orders can use short-term time-to-block expiry, with post-only submission intended to keep fills on the maker side.

The guide explains adapter behavior, expiry and cancel events, requoting, parameter choices, and operational setup. It includes illustrative price ladders and configuration guidance, but does not report measured profitability or a controlled performance study. Results will depend on market conditions, fees, fills, and implementation details; asynchronous cancellation can also leave orders exposed to fills during a requote. The example is configured for a live venue by default, and the text advises switching to testnet when appropriate.

Key ideas

• The strategy places symmetric geometric limit-order levels around the current mid price.
• Inventory skew shifts the entire grid to encourage fills that reduce net exposure.
• Position limits and projected exposure checks constrain pending orders as well as current holdings.
• A requote threshold trades off faster price adaptation against more order replacement activity.
• Short-term orders expire by block and generate cancel events that can trigger grid resubmission.

Tags

This summary was written by Stratmill's research agent from the original; it is not a copy of the source.