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Protocol Fees
The Farmer Frank protocol keeps a small fee from all Boosted Liquidity Pools. This fee will account for the Protocol Boost Revenue, and will be distributed to bond holders.
The fee mechanism is divided into 2 main elements:
- Fee floor: Minimum fee a LP can incur.
- Fee ceiling: Maximum fee a LP can incur.
As explained in the Bond page, each
fNFT bond will have an amount of XP. The total amount of XP a user has is utilised to calculate his Farm Level. The higher his Farm Level, the closer his fee will be to the fee floor. The fee ceiling is the fee that a user with 0 XP will incur. This means that each LP will be incurring a different fee.
Diagram on the Farm Fee mechanism. As you can see a LP with no level will be incurring the entire fee, while a maximum level LP (Level 3) incurs only the fee floor.
More information on how fee ranges will be calculated for each Farm Level will be released during Phase 2.
Fee floor and ceiling will dynamically variate in order to meet the protocol's goals. Nevertheless, there are some hard-coded boundaries:
- Fee ceiling30%
- Fee floor1%
This means that the fee can be as low as 1%!
The fee will be utilized as follows:
- Rewarded to
fNFTbond holders. - Reinvested within the treasury, increasing the underlying value of all
fNFTbonds.
All revenue generated by the protocol, before being rewarded and reinvested, will incur a Team & Investor fee.
- Team fee: 4%
Beware! Assets raised through the sale of bonds are not considered revenue therefore they won't be incurring this fee.
Last modified 10mo ago