Fee
Settlement Fee:
Settlement Fee (or trading fee) is the fee paid by takers (traders) to the makers (LPs). For above/below options, Settlement Fee (SF) is a function of market skew (s), a metric reflecting trade imbalance. Positive skew (s > 0) indicates a market leaning towards either up or down trades, and here, SF linearly scales between a base fee (B) and a maximum fee (M) as per SF Above = B + ((M - B)/S)*s. For negative skew (s < 0), signifying an atypical market, SF inversely adjusts, reducing below the base fee as per SF Down = B - (B/S)*s. This approach dynamically adjusts fees based on market imbalances.
Platform Fee:
Placing Up/Down trades on Buffer incurs a flat fee for interactions on Buffer's 1 Click architecture that enables a 2x faster, and full gasless trading experience. This is a fixed amount used to cover the Router fee for opening & closing a trade.
Fee Distribution:
100% of the settlement fee is distributed between (aBLP & uBLP LPs), BFR Buyback and Burn.
| Source | LPs | Stakers | Buyback & Burn |
|---|---|---|---|
| USDC Protocol Generated Revenue | 70% | 12.5% | 12.5% |
| ARB Protocol Generated Revenue | 70% | 7.5% | 7.5% |
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.