Fees

Liquidity provider fees​

There is a 0.3% fee for swapping tokens. This fee is split by liquidity providers proportional to their contribution to liquidity reserves.

Swapping fees are immediately deposited into liquidity reserves. This increases the value of liquidity tokens, functioning as a payout to all liquidity providers proportional to their share of the pool. Fees are collected by burning liquidity tokens to remove a proportional share of the underlying reserves.

Since fees are added to liquidity pools, the invariant increases at the end of every trade. Within a single transaction, the invariant represents token0_pool / token1_pool at the end of the previous transaction.

Protocol Fees​

At the moment there are no protocol fees. However, it is possible for a 0.05% fee to be turned on in the future.

Protocol Charge Calculation​

In the future, it is possible that a protocol-wide charge of 0.05% per trade will take effect. This represents ⅙th (16.6̅%) of the 0.30% fee. The fee is in effect if feeTo is not address(0) (0x0000000000000000000000000000000000000000), indicating that feeTo is the recipient of the charge.

This amount would not affect the fee paid by traders, but would affect the amount received by liquidity providers.