Kwenta fees explained.
Kwenta is built upon the Synthetix Protocol. In order to enable the exchange of synthetic assets, an exchange fee is charged by Synthetix whose fees are sent to the fee pool for Synthetix (SNX) stakers to claim.
Exchange fees are charged when a trader opens or closes a trade through the Kwenta platform. These fees are sent to the fee pool, where they are available to be claimed by SNX stakers each week. Exchange fees may vary depending on a selected market & network. The most current fees are prominently displayed within the Kwenta trading platform while trading or within these docs at L2 Perpetual Contracts .
Kwenta fees are charged when a trader opens or closes a trade through the cross-margin contracts. Fees may vary. The most current fees will be displayed below & within the Kwenta trading UI.
Dynamic exchange fees are additional fees paid by traders under volatile market conditions that neutralize front-running opportunities and protect stakers.
During periods of high volatility in the crypto markets, a dynamic fee will be levied upon trades to ensure that there are no front-running opportunities present for traders. Once market volatility subsidies, the dynamic exchange fee reverts to zero.
Dynamic fees will be prominently displayed on Kwenta once levied (see example image below).
Example Display of Dynamic Fees on Kwenta
During times of price instability, the dynamic fee is incremented higher according to observed volatility. So as volatility builds, it will accumulate in the dynamic fee. It also has a built-in decay factor, meaning that the dynamic fee will decay exponentially over time when volatility subsides.
At the beginning of each epoch, a dynamic fee gauge contract measures the asset oracle price change between epochs. If this difference is more than twice the prescribed deviation threshold (minimum frontrunnable threshold), the dynamic fee is increased by the size of the differential.
In the subsequent epoch, the dynamic fee is reduced by a decay factor but again subject to additional boosting if price movement between epochs exceeds prescribed thresholds.