Skip to main content

Fees

The Oyl AMM protocol implements a fee structure that incentivizes liquidity provision while maintaining competitive trading costs.

Fee Structure​

Total 0.5% fee for swaps

Trading Fees​

  • 0.3% fee on all swaps
  • Automatically added to pool reserves
  • Distributed proportionally to liquidity providers

Protocol Fees​

  • 0.2% fee on all swaps

How Fees Work​

Fee Distribution​

Trading fees are distributed through the pool mechanism:

  1. Fees are added to the pool's reserves
  2. This increases the value of LP tokens
  3. Liquidity providers benefit when they withdraw

Compound Growth​

Fees automatically compound:

  • Fees increase pool reserves
  • Larger reserves generate more fees
  • Creates positive feedback loop for liquidity providers

Fee Accrual​

Real-time Accrual​

Fees accrue with every swap:

  • No need to claim fees separately
  • Fees are reflected in LP token value
  • Automatic compounding maximizes returns

LP Token Value Growth​

As fees accumulate:

LP_token_value = (reserve_A + reserve_B) / total_LP_supply

The value of LP tokens increases as reserves grow from fees.

Fee Collection​

For Liquidity Providers​

Liquidity providers collect fees by removing liquidity from the pool

Protocol Fee Collection​

The factory contract includes a fee collection mechanism:

#[opcode(10)]
CollectFees { pool_id: AlkaneId }

This allows authorized parties to collect any protocol fees.

Fee Economics​

Liquidity Provider Returns​

LP returns come from:

  • Trading fees: 0.3% of all swap volume
  • Token appreciation: If underlying tokens appreciate
  • Impermanent loss: Risk of loss due to price divergence

Expected Returns​

LP returns depend on:

  • Trading volume: Higher volume = more fees
  • Pool size: Smaller pools may have higher fee yields
  • Market volatility: Affects both fees and impermanent loss

The fee structure in Oyl AMM is designed to be simple, fair, and sustainable, providing strong incentives for liquidity provision while maintaining competitive trading costs.