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:

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

If the position's side has more or equal open interest, fee_dom applies. If it has less, fee_non_dom applies. Dominance is evaluated at the time of the action (open or close), not at position creation.

Price Impact Fee

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

Where impact is the per-market divisor from MarketConfig. Uses floor division.

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. The borrowing rate is an additive dual-utilization curve:

$$\text{rate} = \text{r\_base} + \text{r\_var} \times \text{util\_vault}^5 + \text{r\_var\_market} \times \text{util\_market}^3$$

Where r_base and r_var are global parameters (TradingConfig), and r_var_market is per-market (MarketConfig). The vault term uses a quintic curve (gentle at low utilization, aggressive near capacity) and the market term uses a cubic curve (reacts faster to per-market congestion).

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

On Market Order Open (User)

Recipient	Amount
Treasury	protocol_fee * treasury_rate / SCALAR_7 where protocol_fee = base_fee + impact_fee
Vault	(base_fee + impact_fee) - treasury_fee
Keeper	0 (no keeper involved)

Only base and impact fees apply at open (no borrowing or funding yet).

On Position Close (User)

Recipient	Amount
User	max(equity, 0) where equity = col + pnl - total_fee
Treasury	protocol_fee * treasury_rate / SCALAR_7
Vault	col - user_payout - treasury_fee
Keeper	0 (no keeper involved)

If the vault transfer is negative (user profited), the vault pays via strategy_withdraw.

On Keeper Execution (Fill, TP, SL)

Recipient	Amount
User	max(equity, 0)
Treasury	protocol_fee * treasury_rate / SCALAR_7
Keeper	trading_fee * caller_rate / SCALAR_7
Vault	col - user_payout - treasury_fee - caller_fee

The keeper earns a share of trading fees (base + impact), not of borrowing or funding.

On Liquidation (Keeper)

Recipient	Amount
Treasury	revenue * treasury_rate where revenue = min(protocol_fee + liq_fee, col)
Keeper	min(trading_fee + liq_fee, col) * caller_rate / SCALAR_7
Vault	col - treasury_fee - caller_fee
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.