Fee Structure

Explore the 4 Fee Tier Options DABswap Offers

DABswap Offers Liquidity Providers 4 Fee Tier Options Per Pair: 0.008%, 0.045%, 0.25%, and 1%. This flexibility allows LPs to match their profit margins with the anticipated volatility of each pair. They can assume higher risks for non-correlated pairs like ETH/USDC and opt for minimal risks with correlated pairs, such as USDT/USDC.

While having multiple fee tiers may result in some liquidity fragmentation, it's expected that most pairs will naturally settle into a specific fee tier, which will establish itself as the main market. For example, pairs of similar assets are likely to align with the 0.008% fee tier. Conversely, pairs like ETH/USDC might incline towards the 0.25% fee tier, while more exotic assets could find the 1% swap fees more suitable. If necessary, governance can also introduce additional fee tiers.

0.008% Trading Fees

For stable pairs such as USDT/USDC, where price stability is expected and impermanent loss is minimal, both traders and liquidity providers typically prefer the lowest fee tier, which is set at 0.008%.

0.045% Trading Fees

For assets with more prone to impermanent loss or with less stable liquidity, traders and LPs might opt for this higher fee tier. This approach provides increased fee revenue, incentivizing LPs to provide liquidity and, as a result, helps offset the impermanent loss.

0.25% Trading Fees

This tier caters to more exotic or less commonly traded assets. The higher fee guarantees traders can access these assets, while still allowing LPs to generate significant fee revenue.

1% Trading Fees

This is the highest fee tier designed for assets that are rarely traded or subject to significant impermanent loss. It provides a sizeablel incentive for LPs to supply liquidity, offsetting the impermanent loss and simultaneously granting traders access to these assets and at the same time granting traders access to these assets.

These fee tiers are not mutually exclusive; each token pair can have a liquidity pool within every fee tier. However, asset pairs will likely gravitate towards the fee tier where incentives for both LPs and traders best align.

By offering 4 various fee tiers, DABswap enables traders to benefit from the lowest possible fees while still offering the most appealing liquidity incentives for Liquidity Providers.