Trading Fee
The trading fee refers to the fee paid by the takers to the makers in Chromatic Protocol. The partitioned LP of the protocol consists of 72 unique liquidity bins and each bin has its unique fee rate. Makers can provide liquidity to any of the 72 liquidity bins. While takers can open a position and utilize liquidity from a specific liquidity bin. Takers pay the trading fee based on the liquidity bin’s fee rate. The paid fees for the utilized liquidity are then distributed to the makers who provided liquidity proportionally based on the amount of utilized liquidity from the bin.
| Markets | Trading Fee (Open) | Trading Fee (Close) |
|---|---|---|
GMX | 0.1% | 0.1% |
Binance (Taker) | 0.04% | 0.04% |
Chromatic (TP 100%) | 0.01% ~ | - |
Chromatic (TP 10%) | 0.001% ~ | - |
Fees are collected at the time when takers open a position. Each fee rate is specified for the unique name of each of the 72 liquidity bins. For example, if a taker buys liquidity from the USDC - ETH/USD +0.2% liquidity bin, the +0.2% represents the trading fee rate. It also indicates the relative distance from the index price. If the underlying index is 1,000 USD in the market, this means that the taker buys a position at a price of 1,002 USD including a trading fee of 0.2%. Also, if the taker opens a position with 100 USDC of a taker margin and 900 USDC of a maker margin, the total amount spent for opening the position would be 100 USDC + 900 USDC * 0.2% = 101.8 USDC.
Liquidity being utilized for opening a position is not just from one liquidity bin. Depending on the state of available liquidity, the liquidity to open a single position could be utilized from multiple liquidity bins. This means fees for a single position can be charged across multiple fee rates. For example, if a taker opens a position with a taker margin of 100 USDC and a maker margin of 900 USDC in a market, the liquidity could be utilized from three different liquidity bins as follows:
+0.01% Bin: 400 USDC * +0.01% (1bps) = 0.04 USDC Fee
+0.02% Bin: 300 USDC * +0.02% (2bps) = 0.06 USDC Fee
+0.03% Bin: 200 USDC * +0.03% (3bps) = 0.06 USDC Fee
The taker will be charged a total trading fee of 0.16 USDC (0.04 + 0.06 + 0.06 USDC) to open the position. Thus, the total amount spent to open this position would be 100.16 USDC. (100 USDC taker margin + 0.16 USDC trading fees)
The utilization of liquidity is explained in the Liquidity Utilization section.
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