dynamic swap fee mechanism

[Hyung-bharvest]

There exists multiple generalization design space for swap fee.

• liquidity pools with different swap fees
• liquidity pools with dynamic swap fees
  • decided by governance
  • decided by predefined algorithm
• swap fees sponsored by funds

[Hyung-bharvest]

dynamic swap fee algorithm

• based on volatility : higher volatility, higher fee
• fee = 0.03 % + 0.4% * volatility
  • if volatility = 0%, then fee = 0.03%
  • if volatility = 60%, then fee = 0.27%
  • if volatility = 150%, then fee = 0.63%
  • volatility can be calculated from min/max price in a period (https://www.eurexchange.com/resource/blob/43140/47ca53f0178cec31caeecdf94cc18f6e/data/volatility_and_its_measurements.pdf.pdf)
  • n = 30days, H,L for each 24 hours (1day high/low)

this algorithm automatically allocate 0.03% fee for stable pairs, higher fee for higher volatility pairs