Fee Calculation Example
Pre-Defined parameters (Assumptions)
- Liquidity Fee is charged at the end of each clearing cycle
- Clearing Fee is charged at the end of each clearing cycle
- Liquidity Fee as agreed between brokers is 0.01%
- Price BTC/USDT = 20,000
- Price $YELLOW/USDT = 10
- Transaction: Broker A buys 20 BTC vs. USDT from Broker B
- Agreed Liquidity Fee between brokers = 0.05%
Broker A
- Acts as Market Taker and is thus subject to pay the Liquidity Fee
- 4 open State Channels = 100 bps Clearing Fee
- Liability Broker A: 200,000 USDT (will have to settle/send USDT to Broker B)
Broker B
- Acts as Market Maker and is thus entitled to receive the Liquidity Fee
- 8 open State Channels = 80 bps Clearing Fee
- Liability Broker B: 10 BTC (will have to settle/send BTC to Broker A)
Fee Calculation
- Liquidity Fee Broker A = 200,000 x 0.05% = 100 USDT
- Clearing Fee Broker A = 200,000 / 10 x 1% = 200 YELLOW
- Clearing Fee Broker B = 10 x 20,000 / 10 x 0.8% = 160 YELLOW
Settlement Amounts
| Currency | Broker A | Broker B |
|---|---|---|
| BTC | +10 | -10 |
| USDT | -200,100 | +200,100 |
Fee Payment Cash Flow
| Type | Broker A | Broker B | Period |
|---|---|---|---|
| Liquidity Fee (L1) | -100 USDT | n/a | On Settlement |
| Clearing Fee (L2) | -200 $YELLOW | -160 $YELLOW | On Settlement |
Broker A will receive a total of 10 BTC on settlement and pay a total of USDT 200,100. Yellow Network will receive a total of 360 $YELLOW for the Reserve Vault.
- The Liquidity Fee is charged automatically to the wallet of the Market Taker at the clearing.
- The Clearing Fee is automatically charged to the $YELLOW wallet of both brokers at the clearing.