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Fees

Operational Fees

Operational fees may not be necessary for Volorca.

The purpose of operational fees on Volorca is to facilitate smooth operation of the protocol.

Volorca makes provision for 3 kinds of operational fees to be charged in case it becomes apparent that these incentives are needed for proper functioning of the protocol.

(See implementation details here.)

Settlers' Fee

This is a fee paid as an incentive to users that trigger settlement of instruments.

If active (i.e. non-zero), this fee is deducted from the currency tokens deposited in the instrument contract, before the payout pools are distributed.

Shorts' Fee

This is a fee paid to users that hold SHORT position tokens, to encourage users to deposit currency tokens into the instrument contract.

If active (i.e. non-zero), this fee is deducted from the currency tokens deposited in the instrument contract, before the payout pools are distributed. The fee is then distributed proportionally amongst the SHORT position token holders, according to their SHORT position holdings.

Withdrawal Fee

This is a fee paid by users on each withdrawal, which serves as a deterrent for those who may try to spam or spoof the protocol with unnecessary deposits and withdrawals without any real intention to trade or hold option positions.

If active (i.e. non-zero), this fee is deducted from the amount of currency tokens withdrawn.

The fee is eventually paid to the user that settles the instrument.

Necessity of Operational Fees

These fees may ultimately prove unnecessary, for the following reasons:

  • Settler's fee: LONG holders, SHORT holders, or both, will be entitled to the currency tokens deposited in the instrument contract upon settlement. To retrieve these tokens, settlement will need to be triggered. This may be a sufficient incentive.
  • Shorts' fee: SHORT holders receive premiums if they sell LONG position tokens and interest on their deposits if the interest-yielding feature is active. This may be a sufficient incentive.
  • Withdrawal fee: Each transaction needs the sender to pay gas in the native token of the underlying blockchain. This may be a sufficient deterrent for spammers or spoofers.

Protocol Fees

Protocol fees may be needed to incentivize appropriate governance and development of Volorca.

These fees are under consideration and are currently not implemented.