Overview
The fee manager is an independent module to perform fee management and implement dynamic trading fees.
The SyncSwap Fee Manager is a central component within the SyncSwap ecosystem, responsible for managing swap fees and protocol fees across different pool types. The fee structure is designed to ensure fair distribution of rewards to liquidity providers and to support the operational costs of the SyncSwap protocol.
Fee Structure
There are three main types of pools within the SyncSwap ecosystem:
StablePool
Classic Pool
Aqua Pool
Each type has a unique fee structure and mechanisms for fee collection.
StablePool
For StablePools, which are optimized for pairs of stable assets, the fee structure is as follows:
Fee Collection: The fee is taken in the output token of the swap and calculated against the final amount received. For example, if swapping from USDT to USDC, the fee is taken in USDC.
Liquidity Providers: Fees are also incurred when adding or removing liquidity. The fee application ensures that a swap between USDC and USDT incurs similar fees to depositing USDC into the pool and then withdrawing USDT. The only exception is when liquidity is removed without changing the pool's balance, in which case no fee is applied.
Classic Pool
Classic Pools are designed for a wide range of token pairs and function similarly to traditional AMMs like Uniswap V2:
Fee Collection: The fee is typically taken in the output token of the swap. For example, if swapping ETH for DAI, the fee is taken in DAI.
Liquidity Providers: Similar to StablePools, fees are applied when adding or removing liquidity to maintain fairness and balance within the pool.
Aqua Pool
Aqua Pools are designed for more volatile assets and incorporate mechanisms to handle larger price swings:
Fee Collection: The fee is taken in the LP token of the pool. This approach helps manage volatility and ensures the pool remains balanced.
Auto-Rebalancing: Aqua Pools include additional mechanisms such as auto-rebalancing parameters to maintain stability despite volatility.
Liquidity Providers: Fees are incurred when adding or removing liquidity, consistent with the goal of maintaining pool integrity.
Summary
The SyncSwap Fee Manager ensures efficient and fair fee management across different types of pools, each with its unique mechanisms to handle fees. The majority of the fees collected reward liquidity providers, while a portion supports the SyncSwap protocol's operations.
By understanding the fee structure and mechanisms for each pool type, users can better navigate and participate in the SyncSwap ecosystem.
Last updated