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At Sat.is, our primary goal is to make trading affordable and efficient for a wider range of users. To achieve this, we prioritize promoting liquidity on our platform, which is reflected in our trading fee model designed to offer tight spreads and healthy order book depth. Here's an overview of how we achieve these objectives:
- Supplement protocol revenue for Research and Development
- Incentivise Market Participants for supplying liquidity
- Regulate speculation and manipulation of specific trading pairs
The standard feature of Sat.is trading fees occur each time an order is executed and is based on a percentage of the total value of a trade. Here are the primary three groups of market participants who play significant roles within our trading fees model.
- 1.Price Makers
- Contribute liquidity to the protocol by setting resting limit orders such as bids and asks on Sat.is’ order book. They supply the exchange's liquidity and play a crucial role in reducing spreads by supplying liquidity to takers.
- 2.Price Takers
- Takes away liquidity from the protocol by setting market orders for buying and selling assets. By crossing the spread and accepting the liquidity provided by price makers, takers reduce the available liquidity on the DEX.
- 3.Liquidity Providers (LP) [Coming Soon]
- Liquidity providers supply liquidity to the asset pool in exchange for earning a proportionate portion of the pool's trading fees as revenue. LPs are incentivized to become market makers, hence maintaining deep liquidity within Sat.is as they will earn rewards from each epoch.
Market Participants: Price Makers and LPs
Price Makers and LPs play a vital role in supplying liquidity to Sat.is. While fulfilling this liquidity provision, they undertake specific risks, such as impermanent loss faced by LPs, or capital opportunity costs encountered by Price Makers. Hence, we outline the components of the trading fee structure on Sat.is, encompassing a competitive maker/taker fee system, and incentives in the form of fee-based rebates for market makers.
Sat.is applies a fixed charge of 5 bps in USDC for any interactions with the Sat.is sequencer, to offset the gas expenses incurred by the underlying blockchain. This setup ensures seamless trading encounters through rapid order matching. Besides facilitating trade, Sequencer fees also contribute to decentralizing the sequencer, making it less prone to monopolistic actors.
Sat.is sequencer not only interfaces with the underlying L2 blockchain zkSync Era, to align incoming orders with the protocol, but it also functions as the channel for high-speed interactions like flash deposits, withdrawals, LP minting, and similar actions.
At Sat.is, our commitment to transparency and responsible management of fees is reflected in our strategic approach to fee distribution. We prioritize the allocation of fees towards two areas: research and development, and grow the team and ship products in a more timely matter. By dedicating the revenue generated from trading fees to these core aspects, we ensure the long-term stability, security, and growth of our platform.