Protocol Rules

# Fees

Across the protocol, there are two main economic flows: swap fees and funding rate.

# Swap fees

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

Only active liquidity in the pool receives swap fees. Active liquidity represents all liquidity below the current funding rate. It is not limited to liquidity in the active tick, unlike Uniswap V3.

# Funding rate

Funding rate is collected in ETC and paid between traders and liquidity providers. It is variable and depends on demand for the synthetic asset and the rates set by liquidity providers.

Funding rate settles when traders enter and exit.

A trader entry increases the funding rate by securing more liquidity from liquidity providers. A trader exit decreases the funding rate by releasing liquidity.

The protocol accounts for accumulated funding rate on trader entry and exit, which distributes funding rate to liquidity providers without requiring continuous settlement.

There is a public function rebalance that anyone can call. It accumulates pending funding rate and rebalances the pool at the new price.

Liquidity providers have fees and PnL compounded into the value of their positions. There is no separate fee claim step for LP positions.