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Fees

Float recieves no fees, however, stability fees and funding fees are paid to liquidity providers.

Stability fee (Mint fee)#

When a user mints a position in a market they pay a fee of approximately 8 basis points (0.08%). This is to compensate the Float pool that will need to change their hedge. In the Arctic games, the stability varies between 4 basis points to 20 basis points per market and may change in future.

This fee is distributed to the Float liquidity pool providing counterparty exposure. None of the fee goes to Float.

Funding rate#

Funding amount is a continuous fee paid by the long and short sides to the float pool for the service they provide.

Funding rates are paid each epoch. The rate to be paid scales with the imbalance between the effective long and short liquidity in the market at that epoch. The greater the imbalance the greater the funding rate required. Funding is paid to the Float pool by both the long and short sides of the market, with a greater share being paid by the overbalanced side according to the following formula:

Ft=2√óOt√óMF√óleKF_t = \frac{2 \times O_t \times M_F \times l_e}{K}

Funding paid by the overbalanced side is calculated using:

FO,t=min‚Ā°(Ft,Ft√ó2Ot‚ąíUtOt+Ut)F_{O,t} = \min({F_t , F_t \times \frac{2O_t - U_t} {O_t + U_t}})

Fudning paid by the underbalanced side is calculated using:

FU,t=Ft‚ąíFO,tF_{U,t} = F_t - F_{O,t}

Notation#

  • Ft=Funding¬†rate¬†for¬†current¬†epoch¬†tF_t = \text{Funding rate for current epoch }t
  • Fk,t=Funding¬†rate¬†paid¬†by¬†side¬†k¬†for¬†epochtF_k,t = \text{Funding rate paid by side k for epoch}t
  • MF=Funding¬†rate¬†multiplierM_F = \text{Funding rate multiplier}
  • Lk=Actual¬†liquidity¬†of¬†side¬†kL_k = \text{Actual liquidity of side k}
  • ELk=Effective¬†liquidity¬†of¬†side¬†k¬†(actual¬†liquidity¬†multiplied¬†by¬†leverage¬†of¬†pool)EL_k = \text{Effective liquidity of side k (actual liquidity multiplied by leverage of pool)}
  • EU=Effective¬†underbalanced¬†liquidity¬†between¬†long¬†and¬†shortEU= \text{Effective underbalanced liquidity between long and short}
  • EO=Effective¬†overbalanced¬†liquidity¬†between¬†long¬†and¬†shortEO = \text{Effective overbalanced liquidity between long and short}
  • le=Epoch¬†length¬†(in¬†seconds)l_e = \text{Epoch length (in seconds)}
  • K=Number¬†of¬†seconds¬†in¬†a¬†yearK = \text{Number of seconds in a year}
  • ‚ĄďF=Leverage¬†of¬†the¬†Float¬†pool\ell_F = \text{Leverage of the Float pool}