Revenue Model

Protocol revenue is driven by open interest and executed flow, then split between LPs and protocol treasury.

Fee Architecture

Two fee streams exist in the current design:

1. Open Interest Fee: accrues over time on absolute open notional.
2. Swap Fee: charged per swap transaction.

Both streams use a 25% protocol / 75% LP split.

1. Open Interest Fee

Open positions consume risk capacity and reserve LP capital even when users are inactive. The Open Interest Fee compensates LPs for that ongoing capital usage: essentially rent for occupying the pool's balance sheet. It accrues continuously on absolute notional and is settled whenever a position is touched.

2. Swap Fee

The Swap Fee compensates LP capital for immediate inventory and adverse-selection risk. It is charged on every trade execution, computed from a dynamic fee model that accounts for utilization, inventory imbalance, oracle staleness, and volatility.

Revenue Sensitivities

Protocol revenue primarily depends on:

• Average open interest (for Open Interest Fee stream)
• Notional turnover and effective fee rate (for Swap Fees)
• Protocol fee share setting

Illustrative Scale Table

Open Interest	OI Fee Revenue (Protocol 25%)	Notes
$500M	$125K/year	Assumes 10 bps annual OI fee
$2B	$500K/year	Linear with OI at fixed fee rate
$5B	$1.25M/year	Excludes Swap Fee upside

Swap Fee revenue is scenario-dependent and should be modeled with observed turnover and realized fee mix.

Next Reading

• User Guide
• Protocol Documentation