Fee System

Fees are charged on every position open and close. They flow to three recipients: the vault (liquidity providers), the treasury (protocol), and keepers (execution incentive).

Fee Components

Base Fee

The base fee depends on which side of the market the position is on:

$$\text{base\_fee} = \text{notional} \times \frac{\text{base\_fee\_rate}}{\text{SCALAR\_7}}$$

Dominance is evaluated against the post-action market state, not the pre-action state. The contract calls is_dominant(side, notional) with the position's notional added (on open) or removed (on close), then checks whether that side ends up strictly larger than the other.

Action	Pays fee_dom when	Pays fee_non_dom when
Open	Your side is strictly larger after the position is added	Your side is equal or smaller after the add
Close	Your side is no longer strictly larger after the position is removed	Your side is still strictly larger after the removal

This means a position opened on the current minority side can still pay fee_dom if it is big enough to flip dominance. A close from the dominant side that leaves the side dominant pays fee_non_dom (it reduced imbalance).

fee_dom and fee_non_dom are SCALAR_7 fractions of notional, bounded by MAX_FEE_RATE = 100_000 (1%).

Price Impact Fee

$$\text{impact\_fee} = \lfloor \frac{\text{notional}}{\text{impact}} \rfloor$$

Where impact is the per-market divisor from MarketConfig. Charged on every open and every close. Floor division means orders with notional < impact round down to zero impact fee, so most small trades effectively pay only the base fee.

Funding

Accumulated funding cost or credit since the position was filled:

$$\text{funding} = \text{notional} \times \frac{\text{current\_fund\_idx} - \text{entry\_fund\_idx}}{\text{SCALAR\_18}}$$

Positive funding represents a cost to the position (position paid funding). Negative funding represents a credit (position received funding). Funding is purely peer-to-peer: 100% flows between longs and shorts with no protocol cut. See Funding Rate for how indices are computed.

Borrowing Fee

Accumulated borrowing cost since the position was filled:

$$\text{borrowing\_fee} = \text{notional} \times \frac{\text{current\_borr\_idx} - \text{entry\_borr\_idx}}{\text{SCALAR\_18}}$$

Borrowing fees are always non-negative and accrue only to the dominant side of the market. They flow to the vault (LPs) and the treasury (protocol revenue), split by the treasury rate. See Borrowing Rate for how the rate is computed and how indices accrue.

Total Fee

$$\text{total\_fee} = \text{base\_fee} + \text{impact\_fee} + \text{funding} + \text{borrowing\_fee}$$

Protocol Fee

Protocol revenue excludes funding (which is peer-to-peer):

$$\text{protocol\_fee} = \text{base\_fee} + \text{impact\_fee} + \text{borrowing\_fee}$$

Treasury receives a cut of protocol_fee. Keepers receive a cut of trading_fee (base + impact only).

Fee Distribution

Every settlement uses the same shape. Three constants are computed and the vault gets whatever is left:

treasury_fee = protocol_fee * treasury_rate / SCALAR_7
caller_fee   = trading_fee  * caller_rate   / SCALAR_7   // zero if user-initiated
user_payout  = max(equity, 0)                            // zero on opens / fills / liquidations
vault        = col - user_payout - treasury_fee - caller_fee

Two orthogonal axes decide which terms are non-zero on a given event:

• Closes (self close, TP, SL) settle PnL. They pay a user_payout and add accrued borrowing into protocol_fee. Opens and fills set user_payout = 0 and have no borrowing yet, so protocol_fee = base + impact on those.
• Keeper-initiated events (limit fill, TP / SL close) pay a caller_fee cut from the trading fee. User-initiated events (market open, self close) set caller_fee = 0.

If vault is negative on a close (user profited), the vault pays via strategy_withdraw. The keeper's share is always cut from the trading fee (base + impact), never from funding or borrowing.

Liquidation

Liquidation is structurally different because the liquidation fee is added to the keeper and treasury cuts:

liq_fee      = max(equity, 0)                                // remaining equity at liq time
revenue      = min(protocol_fee + liq_fee, col)
treasury_fee = revenue                       * treasury_rate / SCALAR_7
caller_fee   = min(trading_fee + liq_fee, col) * caller_rate / SCALAR_7
vault        = col - treasury_fee - caller_fee
user_payout  = 0

No PnL is settled for the user; all collateral is redistributed. | User | 0 (all collateral redistributed) |

liq_fee = max(equity, 0) is the remaining equity at liquidation time. Treasury receives a share of the total revenue (protocol fees + liquidation fee). No PnL settlement occurs for the user.

Limit Order Fee Handling

When a limit order is placed, the user's full collateral is transferred to the contract with no fee deduction. Fees are computed and deducted from collateral at fill time via ctx.open(), based on the position's dominance at that moment. This means limit orders have no fee cost until they are actually filled by a keeper.

Treasury Rate

The protocol fee rate is fetched from the treasury contract via a cross-contract call (TreasuryClient::get_rate()) on every trade. This allows the protocol to adjust fees dynamically without redeploying or reconfiguring the trading contract.