Directional & Dynamic Volatility Fees

V3 introduces a fee structure that adapts to the fluctuations in the underlying market, delivering substantial efficiency improvements. The protocol dynamically tunes fees for each liquidity pool in response to the prevailing volatility, enhancing both fee generation and trade volume.

A noteworthy feature of this system is its capacity to establish distinct fee ranges based on volatility for both buying and selling. Consequently, each liquidity pool can provide highly tailored fee structures tailored to specific market conditions. This level of customization results in elevated fees and trading activity, as fees align more precisely with the market's risk profile.

During periods of decreased trading activity, the fees automatically decrease, preventing users from encountering excessive fees in quieter market conditions. Conversely, during periods of heightened market volatility, fees increase proportionally to account for the elevated risk.