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Fees and Distributions

Last updated: 24th of May, 2024

Please note all fee related information is heavily subject to change throughout our development process - please treat this information as an estimate rather than fact

On-Chain Stable Coin Trading

Between -0.02% to 0.04%, as calculated below:

  • Where:
    • li = Liquidity of Input Token
    • lo = Liquidity of Output Token
    • t = Trade volume
  • in the event a stablecoin is trading slightly above or below peg, x and y may be adjusted slightly to ensure efficient trading continues
  • in an ideal situation, x would be around 0.04 and y would be around 0.01
    • the minimum fee can be calculated as (-y)%
    • the maximum fee can be calculated as (x - y)%
    • the average fee can be calculated as ((x -2y)/2)% = 0.01%

Lending Protocol Interest Rates

Please note: all the utilization rates and fees are indicative at this stage and subject to change

  • Interest rates may be different for each asset depending on demand
  • Interest rates may be adjusted depending on market conditions
    • For example, during a bull market yield farming is typically more profitable, thus a higher interest rate should be applicable compared to a bear market
  • A hypothetical interest rate structure could be:
    • Utilization between 0% to 70%: 2%
    • Utilization between 70% to 90%: 2% to 5%
    • Utilization between 90% to 100%: 5% to 100%

Utilization refers to portion of total supply being used and Aqualis wants to keep this high

As an example, a 40% utilization rate at 5% interest gives the protocol 2% return on deposits.
However, an 80% utilization rate at 3% gives the protocol 2.4% returns. In this scenario, Aqualis offers both lower fees for borrowers while simultaneously providing a higher rate of return for depositors. The above example ignores protocol revenue share, which Aqualis plans to also charge the lowest fee for.

Fee Distributions for SP and Lending

Please note the below distribution is subject to change

  • 83% to depositors (compounded through SP or Interest Bearing token appreciation)
  • 10% to AQL stakers (through the AP Rewards Pool)
  • 4% to the Burn Budget
    • Although fees will be a consistent source of income for the Burn Budget, ad hoc promotions and other activities will also contribute to the total burn
  • 3% to the DAO Treasury
    • The DAO will slowly build liquidity, which can be deposited back into Aqualis or used by however the community sees fit

Loan Liquidation Fees

4% of the loan value will be deducted from the funds returned to the user

  • 2% will go to the liquidation bot
    • In house bots will use this to pay for gas fees
    • Surplus liquidation bot fees will go to the Operations Budget
  • 2% of this fee will go to the DCIF
  • For example, if a user takes out a $2,000 loan and is liquidated with $2,400 collateral remaining, $2,000 will be used to pay back the loan, a $40 bounty will be sent to the liquidator and $40 will be sent to the DCIF. The user will receive $320 as the remainder.