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Fees
The cost to open a position is 15% of the position size. Whenever a user opens a trade, Buffer contract mints an NFT token for the user and burns it at the time of closing. Based on the trading pool a %age of the fee collected is distributed to BLP holders and BFR stakers.
Buffer employs a "Dynamic Pricing" mechanism to incentivize or penalize traders, with the aim of maintaining balance in the Open Interest (OI) across various markets and promoting diversification among traders. This mechanism is intricately designed to impose higher fees during periods of market volatility. The fee is applicable to all trades and dynamically scales, influenced spread factor (C) for that market, trading volume, and payouts. As the iv, oi scales higher, a premium will be applied to top of the default settlement fees.
Based on the trading pool a %age of the fee collected is distributed to BLP holders and BFR stakers.
This fee goes to the Settlement Fee Disbursal (SFD) Contract. SFD contract transfers this fee to the reward distributor contracts of staking.
The protocol uses the chainlink keeper to distribute the fee accumulated in the SFD contract to the respective distributors every Wednesday at 12:00 UTC.
Pool | LPs |
|---|---|
aBLP | 70% to LPs, 15% to BFR stakers, 15% held in treasury for incentives |
uBLP | 60% to LPs, 40% to BFR stakers |
BFR (only supported on the Classic Buffer App) | 50% Burned (until max supply of 50M BFR is reached), remaining 50% held in treasury for v2.5 incentives |
Placing Up/Down trades on Buffer incurs a flat fee for interactions with the Buffer keeper to compensate for the gas paid to the underlying blockchain while allowing for a 2x faster 1 Click trading experience.
Keeper fees are as follows:
- Placing an Up/Down trade: 0.1 USDC (flat)