💸Fees

Introduction:

Fees are calculated based on the total value of the position size (leverage x collateral), excluding expected fees on collateral only. It's important to note that spread and price impact are only relevant to opening positions and not closing positions.

Opening Fees:

Let's assume we go long on ETH/USD with a leverage of 10x using 1,000 USDT. The fee applies to the leveraged amount, which is 10,000 USDT. 10,000 * (0.05/100) = 5 USDT fee 995 is the total collateral value of your position, so the total position size is 9,950.

Closing Fees:

Suppose ETH/USD has increased by 1% from the opening price, and we close the trade at 3,033.22. The unrealized profit (PnL) would be 10% of the total collateral, which is 9,950 USDT. Now, as we close the trade, we pay a closing fee. It's important to note that fees always apply to the initial position size (without PnL). 9,950 * (0.05/100) = 4.975 USDT closing fee

Fixed Spread:

When starting a trade, the Chainlink oracle returns the price of the asset, for example, 3,003.19. Considering the spread of 0.04%, the opening price before considering the dynamic spread would be 3,004.39. i.e., 3,003.19 + (3,003.19 * 0.04 / 100) = 3,004.39

Dynamic Spread:

The dynamic spread, previously known as "price impact," is added on top of the fixed spread, if applicable for the currency pair. It depends on the position size of the currency pair, the position size of the opening trade, and the direction of the trade (long/short). Dynamic Spread (%) = (Open Contracts {long/short} + New Trade Position Size / 2) / 1% Depth {upside/downside}.

Overnight Interest:

Overnight interest is charged per block and applies only to collateral. It helps achieve low leverage on the platform through proper risk management.

For example, referring to the screenshot, the overnight interest for TRX/USD at the time of the screenshot is 0.0082% per hour. This means that if you have a 10x long position, you will pay 0.00082% of the position size as overnight interest and receive 0.0481% of the position size from funding fees (net positive of 0.04728% per hour).

Funding Fees:

Funding fees increase the position value of the side with less risk exposure (e.g., if the majority is long - traders holding short positions will receive compensation) and are paid from the position value of the side with higher risk exposure (e.g., long positions) when the majority is already long. It naturally adjusts based on the opening and closing positions of others - during the course of the trade, it can switch from negative to positive and vice versa. This means that if you choose the less favored side, your liquidation price will gradually move away (i.e., become harder to be liquidated), and your position will be more valuable, while the opposite applies if you choose the more favored side. Specifically in the user interface: Green value indicates that you make money from that position. Red value indicates that the position costs you.

Liquidation Price:

If you pay funding/rollover fees, the liquidation price of the trade will move closer over time or further if you profit from funding fees. Liquidation Price Distance = Opening Price * (Collateral * 0.9 - Rollover Fees - Funding Fees) / Collateral / Leverage. Liquidation Price = If Long: Opening Price - Liquidation Price Distance Else (Short): Opening Price + Liquidation Price Distance. For example, let's say you open a long BTC/USD position at a price of $20,000 with 100x leverage and $50 USDT collateral, and you earn 1 USDT in funding fees and pay 0.5 USDT in overnight interest: Liquidation Price = 20,000 - 20,000 * (50 * 0.9 - 0.5 - (-1)) / 50 / 100 = $19,818.