Auto-bridging and tick size

Auto-bridging

Anita wants to sell GBP tokens and buy BRL tokens. Few people trade that exact pair. The one good offer is too small for her.

Both tokens trade actively against XRP. So the ledger can do two trades for her in one step: GBP to XRP, then XRP to BRL. If that route gives a better rate than the direct one, the ledger uses it. It can also mix both: take the small direct offer first, then send the rest through XRP.

This is auto-bridging. Anita does not ask for it. It happens whenever it helps. It works because XRP is the ledger's own asset and can be traded against every token.

Tick size

Picture two sellers fighting for first place in line. One asks 1.000000 per token. The other undercuts at 0.999999. The first answers with 0.999998. Nobody gains from changes that small, and the book churns.

An issuer can stop this with a tick size. It limits how many digits a rate can carry. With fewer digits, a trader has to improve the rate by a real step to move ahead.

Auto-bridging

• Runs on any OfferCreate that trades two tokens. No flag is needed.
• Uses XRP as the middle step in a synthetic order book, built from the token-to-XRP and XRP-to-token books.
• One offer can execute against a mix of direct and bridged liquidity for the best total rate.
• Payment transactions do not auto-bridge by default. Pathfinding can find paths with the same effect, and cross-currency payments between two tokens use XRP as a bridge when that lowers the cost.

Tick size

• Set by the issuer with AccountSet, field TickSize, an integer from 3 to 15.
• It truncates the number of significant digits in an offer's exchange rate when the offer is placed in a book. The exponent is not affected, so rates between assets of widely different value still work.
• XRP against a token: the token issuer's TickSize applies.
• Token against token: the smaller TickSize applies. If neither issuer set one, default behavior applies.
• A lower value means a bigger step is needed to rank ahead of existing offers.

Tick size does not touch the part of an offer that executes at once. Offers with tfImmediateOrCancel are unaffected. For the remainder, the engine truncates the rate, then rounds one side of the offer to match:

• Buy offer (default): TakerPays is rounded.
• Sell offer (tfSell): TakerGets is rounded.

Changing or removing TickSize leaves existing offers as they were.

Related: Payments, tags and paths, Order books and offers.