Fees

Trading Fees

Trading fees are distributed proportionally among all the liquidity providers who have active liquidity within the defined range at the time of the trade. However, if the spot price moves beyond the range of a particular position, the liquidity pertaining to that position becomes inactive and does not generate any fees. Nevertheless, if the spot price reverts and reenters the price range of the position, the liquidity once again becomes active, resulting in the generation of fees.

Fees are accumulated independently from the pool and need to be redeemed manually by the Liquidity Provider or pool owner when they desire to collect their fees.

Fee Tiers

When creating new liquidity pools, Liquidity Providers have the option to create pools by choosing 1 of 4 different fee levels: 0.01%, 0.05%, 0.3%, or 1%.

Choosing the right fee tier for the pool that a Liquidity Provider creates can depend on several factors such as the aggregate liquidity of a given asset in other pools or markets outside Intrinsic among other reasons. For example, the expectation for low volatility assets such as high-volume stablecoins, will predominantly gravitate to the lowest fee tier, due to the minimal price risk involved for liquidity providers who hold these assets, while traders will be incentivized to seek an execution price as close to 1-to-1 as possible.