Protocol Rules

# Fees

Accross the protocol, there is 2 kind of fees collected, the swap fees and the funding rate.

# Swap fees

Swap fees are collected in ETC on each swap and are fixed to 0.3% of the trade value. Half of it is sent to the data providers as a bounty, and the other half is sent to the liquidity providers as a reward.

Only the liquidity active in the pool will receive a share of the swap fees. Liquidity active represents all the liquidity below the current funding rate, it is not limited to the liquidity in the active tick as is the case for Uniswap V3.

# Funding rate

Funding rates are collected in ETC and are paid by the traders to the liquidity providers. The funding rate is variable and depends on the demand for the synthetic asset and the liquidity providers rate.

Funding rates settles on each trader entry-exit.

A trader entry will increase the funding rate by securing more liquidity from LP's, and a trader exit will decrease the funding rate by releasing liquidities - by accounting accumulated FR on trader entry and exit we lazily and accurately distribute the FR to the liquidity providers.

There is a public function rebalance that can be called by anyone - it will accumulate the pending Funding Rate and rebalance the pool at the new price.

Liquidity Provider get all their fees and PnL compounded to the value of their position. There is no need to claim the fees, they are automatically added to the LP position.