Skip to main content

Dynamic Fees

HyperAMM uses a dynamic fee model that adjusts to real-time market conditions. Fees are composed of four components, each serving a specific purpose.

Fee Components​

1. Base Fee​

A minimum fee applied to all swaps. This covers the baseline cost of hedging and ensures LPs always earn a minimum return.

2. Imbalance Fee​

Adjusts based on the pool's current liquidity balance. When a swap would push the pool further from its ideal composition, the fee increases to discourage further imbalance. Swaps that help rebalance the pool receive a discount.

3. Market Impact Fee​

Scales with order size relative to available liquidity. Larger trades incur higher fees to compensate LPs for the increased hedging cost and slippage risk. The sensitivity is controlled by a miFactor parameter calibrated off-chain from order book analysis.

4. Premium Adjustment​

Protects the pool when the perpetual mark price deviates from the oracle (spot) price or when the settlement stablecoin depegs. Unlike the other fee components, this is not added as a fee — it adjusts the price at which the pool quotes swaps, ensuring the pool is not mispriced relative to Core markets.

How Fees Adjust​

The fee engine uses real-time data from multiple sources:

  • Oracle prices — Spot and perpetual mark/oracle prices for pricing and premium calculations
  • Core delta — Current hedge position size for imbalance calculations
  • MIFactor — Pre-calibrated market impact parameter maintained by an off-chain keeper
  • Mark-oracle spread — Perpetual mark price vs. oracle price for premium adjustments

Fees are calculated per-swap and displayed to users before they confirm the trade.

What This Means for Users​

For Traders​

  • Small swaps in the direction that rebalances the pool get the best rates
  • Large swaps or swaps that increase imbalance cost more
  • Total fee is always visible in the swap quote before confirmation

For LPs​

  • Dynamic fees ensure LPs are compensated for the actual cost and risk of each trade
  • Higher volatility and larger order flow generate higher fees
  • Fee revenue is automatically distributed proportionally to all LP token holders

Fee Configuration​

Fee parameters are configured per-pool by the protocol and can be adjusted via governance. Key parameters include:

  • Base fee percentage
  • Market impact factor (MIFactor) — calibrated from order book depth
  • Imbalance penalty and discount caps
  • Maximum stable price divergence (circuit breaker for stablecoin depegs)

Next Steps​