Fees

This guide explains how fees are structured, calculated, and distributed across the system.

• Dynamic Fee Calculation: Adjust fees based on trade type (open/close) and user activity.

• Volume-Based Discounts: Reward active traders with reduced fees through tiered multipliers.

• Fee Distribution: Allocate fees to protocol vaults, governance stakers, and optional third-party services.

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How Fees Are Calculated

Base Fee Rates

Every trade type has a base fee percentage:

• Opening Fee: Charged when initiating a position.

• Closing Fee: Charged when closing a position.

• Trigger Fee: Applied to conditional orders (e.g., limit or stop orders).

Example Base Rates:

• Open Fee: 0.1%

• Close Fee: 0.1%

• Trigger Fee: 0.02%

Volume-Based Adjustments

Traders earn points proportional to their trading volume (in USD). Over time, these points unlock fee tiers, which reduce fees by a multiplier. For example:

• Tier 1: 97.5% of base fees (2.5% discount) at 6,000,000 points.

• Tier 2: 95% of base fees (5% discount) at 20,000,000 points.

Points decay over a trailing period (e.g., 30 days), ensuring only recent activity affects tiers.

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Fee Distribution

Fees are split between three parties:

1. Protocol Vault Receives a portion of closing fees (e.g., 80%) to support platform stability.

2. Governance Stakers Earn rewards from open fees and most closing/trigger fees. These accumulate in a pool claimable by future stakers. TBD

3. Trigger Service Providers (Optional) Receive 20% of trigger fees if they provide order execution services (e.g., oracle nodes).

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Step-by-Step Fee Lifecycle

Opening a Trade

1. Calculate Base Fee: $\text{Open Fee} = \text{Position Size} \times \text{Open Fee Rate}$
2. Apply Multiplier: Reduce the fee using the trader’s tier.

3. Distribute:

   • LPs and stakers receive the adjusted open fee.

   • If a trigger order, 20% of the trigger fee goes to the service provider; 80% to LPs and stakers.

Closing a Trade

1. Calculate Base Fee: $\text{Close Fee} = \text{Position Size} \times \text{Close Fee Rate}$
2. Apply Multiplier (if not a liquidation).

3. Split Fees:

   • Vault receives a fixed percentage (e.g., 80% of the close fee).

   • Remaining close fee and trigger fees go to governance stakers.

Liquidations

Liquidation fees are typically higher (e.g., 5% of collateral) and bypass tier discounts. These are split between the vault and stakers.

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Example Scenario

Trader A Opens a Limit Order

• Position Size: $10,000

• Base Fees:

  • Open Fee: $10 (0.1%)

  • Trigger Fee: $2 (0.02%)

• Fee Tier: 0.95 multiplier (Tier 2)

• Adjusted Fees:

  • Open: $10 × 0.95 = $9.50

  • Trigger: $2 × 0.95 = $1.90

• Distribution:

  • $9.50 to LPs.

  • $0.38 (20% of trigger fee) to the trigger service; $1.52 to stakers.

Trader A Closes the Position

• Close Fee: $10 × 0.95 = $9.50

• Stakers Portion: $9.50 × 20% = $1.90

• Vault Receive: $7.60 ($9.50 – $1.90) + $1.52 (trigger remainder) = $9.12

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Key Concepts

• Trailing Points: Only recent trading activity (e.g., last 30 days) counts toward fee tiers.

• Minimum Fees: Small positions below a threshold (e.g., $100) may bypass fees to reduce spam.

• Governance Pool: Unclaimed staking rewards accumulate until users withdraw them.

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Why It Matters

• Fair Pricing: Active traders pay lower fees, encouraging liquidity.

• Protocol Sustainability: Fees fund the vault (for risk management) and reward governance participants.

• Flexible Configuration: Admins can adjust pair multipliers, tiers, and fee splits to align with platform goals.

By balancing incentives for traders, stakers, and service providers, the Fees Module creates a sustainable ecosystem for perpetual trading.