Fee Structure

The Potions ecosystem incorporates a carefully designed fee structure to sustain its operations, incentivize participation, and ensure long-term ecosystem stability. Each fee type serves a specific purpose and collectively supports liquidity, volatility, and yield generation.

Fees are divided into Base Fees and Compound Fees, each serving distinct purposes in sustaining the ecosystem and creating balanced incentives.

Base Fees

Base Fees are standalone charges applied to specific actions or transactions. They serve targeted purposes, such as incentivizing liquidity, reducing token supply, or funding operational and developmental needs.

CBR Burn Fee

Applied In: Wrap/Unwrap.

Mechanics: Fees are taken and burned directly from the supply of derivative assets.

Goal: Reduces the supply of derivative assets (e.g., lYEL), driving up the Backing Ratio over time. A portion of wrap and unwrap fees is allocated to burning derivative tokens, benefiting long-term holders.

Role: Drives volatility and incentivizes users to create derivative assets by increasing the value of those remaining in circulation.

Typical Range (Settlement Sum Based): 0.7%–0.8%.

LP APR Fee

Applied In: Wrap, Buy/Sell.

Mechanics: A portion of the fee is distributed to liquidity providers as part of their APR, rewarding them for supporting the ecosystem’s liquidity pools.

Goal: Encourages liquidity provision in parallel pools, ensuring efficient trading and price discovery.

Role: Incentivizes users to supply liquidity, which facilitates trading, arbitrage, and ecosystem activity.

Typical Range (Settlement Sum Based): 0.4%–0.7%.

YEL Burn Fee

Applied In: Wrap, Buy/Sell.

Mechanics: A portion of the fee is allocated to burning YEL tokens, reducing the circulating supply and creating a deflationary effect.

Goal: Strengthens the Tokenomics model of YEL token by decreasing its overall supply.

Role: Supports the ecosystem’s long-term value and sustainability.

Typical Range (Settlement Sum Based): 0.020%–0.035%.

Partner Fee

Applied In: Wrap, Buy/Sell.

Mechanics: A portion of the fee is distributed to a designated partner wallet, incentivizing collaborations and partnerships.

Goal: Rewards potion creators and fosters ecosystem growth by providing financial incentives to partners.

Role: Encourages external partnerships and innovation within the ecosystem.

Typical Range (Settlement Sum Based): 0.0%–0.1%.

Admin Fee

Applied In: Wrap, Buy/Sell.

Mechanics: A minor portion of the fee is allocated to the ecosystem's administrative operations and development efforts.

Goal: Ensures smooth operation and supports ongoing improvements to the Potions ecosystem.

Role: Funds ecosystem growth and operational sustainability.

Typical Range (Settlement Sum Based): 0.00%–0.05%.

Compound Fees

Compound Fees simplify user experience by providing a single cumulative cost for key actions in the Potions ecosystem. Instead of listing each Base Fee, users are presented with a consolidated fee that encompasses all applicable components for wrapping, unwrapping, and buy/sell actions.

Wrap Fees

Wrap Fees are charged to support liquidity incentives, drive volatility through burning, and reward ecosystem contributors. They ensure that the system remains sustainable while incentivizing users to create derivative assets.

Applied In: Wrapping original assets (e.g., YEL) into derivative assets (e.g., lYEL).

Consisting Of:

• CBR Burn Fee

• LP APR Fee

• YEL Burn Fee

• Partner Fee

• Admin Fee

Typical Range: 0.7%–2.0%

Unwrap Fees

Unwrap Fees encourage long-term holding of derivative assets by imposing a cumulative cost on conversions back to original assets. These fees also contribute to the sustainability of the backing ratio and overall ecosystem health.

Applied In: Converting derivative assets (e.g., lYEL) back into original assets (e.g., YEL).

Consisting Of:

• CBR Burn Fee

• Other fees excluded to focus on incentivizing long-term holding.

Typical Range: 0.7%–1.5%

Buy/Sell Fees

Buy/Sell Fees incentivize liquidity providers, support arbitrage opportunities, and help maintain trading efficiency within the ecosystem. These cumulative fees also contribute to token burning and ecosystem funding, ensuring long-term stability.

Applied In: Trading derivative assets (e.g., lYEL) in parallel liquidity pools.

Consisting Of:

• LP APR Fee

• YEL Burn Fee

• Partner Fee

• Admin Fee

Typical Range: 0.3%–1.0%