Pool Fee

The Pool Fee in the Bidask Protocol primarily refers to the Liquidity Provider (LP) Fee, which is a commission earned by liquidity providers based on the trading volume using their liquidity. This fee is deducted from the tokens received by traders when they execute a swap within the pool.

Fee Distribution

Fees are distributed proportionally among all active liquidity positions within the bin that contains the current active price. When the active price moves outside the range of a liquidity position's bin, that position becomes inactive and ceases to earn fees. This mechanism ensures that only liquidity actively contributing to trades is rewarded.

Auto-Compounding

LP fees are automatically reinvested into the pool, meaning liquidity providers do not need to manually claim these earnings. This auto-compounding helps to grow the liquidity position over time efficiently.

Fee Options

When creating a liquidity pool, Bidask allows pool creators to select from three preset LP fee options:

• 0.05% for stable pools, typically low volatility pairs
• 0.3% for common pools, standard trading pairs
• 1% for specific pools, such as those containing recently airdropped or limited supply tokens

If a custom fee rate is needed, the Bidask team can create a pool with any fee value upon request.