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Exchange Fees

Exchange base Fee

Dynamic Exchange Fees

Dynamic Exchange Fees is a dynamic fee on top of the normal exchange base fees for the spot exchange and is based on the market's volatility. If there is a lot of market volatility, the dynamic exchange fees increase, while when the market is calm, the dynamic exchange fees decrease to 0.

How Dynamic Exchange Fees work

The idea of a dynamic exchange fee is to make it unprofitable for front-runners or parties that are taking advantage of volatility arbitrage.
A dynamic exchange fee contract tracks the price of a zAsset across epochs, and as the price swings, the dynamic exchange fee increases and is applied as an additional fee over the base fee. A decay factor is applied to the dynamic exchange fee the entire time, which means that over time, as the price stabilizes, the dynamic exchange fee goes back down to 0.

To simplify:

  • price volatility = dynamic exchange fee going up
  • price stability = dynamic exchange fee gradually going down to 0
The dynamic exchange fee is different for each zAsset and is dependent on the market volatility for that zAsset.