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ExamplesIncentive AlignmentVolume-Based Fees

Volume-Based Fees

When using a fixed fee tier, we might encounter two problematic scenarios:

  • Fees too low to incentivize LPs
  • Fees too high, increasing traders’ costs

We can create a built-in volume oracle and adjust the fee based on the recent trading volume of the pool. By doing this, we set low fees when volume is low and higher fees when volume is high, aligning incentives between LPs and traders.

WIP.

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