🈁Adaptable Fee Structure

Arbidex's Quantum offers liquidity providers four distinct fee tiers per pair, namely 0.01%, 0.05%, 0.25%, and 1%. This flexibility allows LPs to align their profit margins with the anticipated volatility of each pair, taking on higher risks for non-correlated pairs like ETH/USDC, and minimal risks for correlated pairs such as USDT/USDC.

Though having multiple fee tiers may result in some fragmentation of liquidity, it is anticipated that most pairs will gravitate towards a specific fee tier, which will emerge as the primary market. For example, similar asset pairs are expected to cluster around the 0.01% fee tier, while pairs like ETH/USDC may prefer the 0.25%% fee, and more exotic assets might find the 1% swap fees suitable. If necessary, governance can introduce additional fee tiers as well.

-Trading Fees 0.01%: For stable pairs such as USDT/USDC, where price stability is expected and impermanent loss is minimal, traders and liquidity providers tend to opt for the lowest fee tier of 0.01%.

-Trading Fees 0.05%: For assets with higher impermanent loss or less robust liquidity, traders and LPs may agree on a higher fee tier to provide more fee revenue and incentives for LPs to provide liquidity, thereby mitigating impermanent loss. This fee tier is intended for assets that are volatile but relatively well-traded or expected to have a higher impermanent loss.

-Trading Fees 0.25%: This fee tier is for more exotic or less frequently traded assets, where the higher fee provides traders access to these assets while still allowing LPs to earn sufficient fee revenue.

-Trading Fees 1%: The highest fee tier is intended for assets that are traded less frequently or have an even higher impermanent loss. This fee tier provides a greater incentive for LPs to provide liquidity and overcome impermanent loss while still enabling traders to access these assets.

It is important to note that these fee tiers are not mutually exclusive as each token pair can have a liquidity pool for each fee tier. However, asset pairs will tend to gravitate towards the fee tier where incentives for both LPs and traders more closely align.

In summary, the different fee tiers exist to provide a balance between traders paying the lowest fee tier while still incentivizing the highest possible liquidity from LPs.