Fees

Fees

Swap Fees

In our focused liquidity protocol, swap fees are distributed in proportion to the in-range liquidity at the time of a swap transaction. Only liquidity positions within the price ranges encompassing the current spot price contribute liquidity and consequently qualify for fee earnings. If the price moves beyond a position's range, that position becomes inactive, rendering it ineligible to earn fees.

Diverging from conventional AMM contracts that automatically add swap fees to the liquidity pool, our concentrated liquidity protocol segregates swap fees, allowing liquidity providers to claim their fee earnings independently of withdrawing their liquidity.

It's crucial to emphasize that the Rabbit Inu protocol is solely comprised of autonomous smart contracts deployed on BSC. These contracts are directly operated by users who invoke functions, facilitating interactions with other users and pooling selected assets in a decentralized, peer-to-peer manner. The entity that initially deployed the smart contract has no further control or interaction beyond providing technical tools for users. Importantly, this entity doesn't offer any securities products or regulated services, nor does it hold user assets in custody.

Fee Tiers

Within our concentrated liquidity protocol, the capability to establish multiple pools for the same token pair with varying fee tiers is a key feature. Initially, the protocol accommodates four tiers: 0.01%, 0.05%, 0.25%, and 1%.

This diversity in fee tiers serves to better cater to the unique requirements of different trading pairs. It also fosters a natural evolution of the market, allowing it to organically determine the most optimal liquidity distribution plan. This approach provides heightened flexibility for both liquidity providers and swappers.

It is rational to expect that distinct token pairs will gravitate toward specific fee levels based on their individual asset characteristics and the interplay between supply and demand from liquidity providers and traders. Assets with lower volatility, such as stablecoins, are likely to aggregate in a pool with the lowest fee tier. This is because it entails less risk for liquidity providers to hold these stable assets, and traders typically anticipate executing transactions as closely to a 1:1 ratio as possible. Conversely, assets that experience infrequent trading may incline towards a higher fee tier, reflecting the heightened risk borne by liquidity providers holding such high-volatility assets.

Protocol Fees

To maintain a healthy economic model that is beneficial to the project's sustainable project treasury for its long term development, a certain percentage (20% by default) will be taken from swap fees of every transaction on Rabbit Inu as the protocol fee.