Fees

Protocol fees are collected when add and addLeverage are called on a Position contract.

How are fees calculated when `add` is called?

When add is called on a Position contract, a small amount of the collateral token supplied is taken as a fee.

Quantity	Description
$cAmt$	The amount of collateral token supplied when calling `add`.
$protocolFeeRate$	The maximum fee the user could pay, as a percentage of $cAmt$ . To get the current fee rate, call protocol fee rate on the `FeeCollector` contract.
$maxFee$	The maximum fee the user could pay, in terms of the position's collateral token. $=cAmt*protocolFeeRate$
$clientRate$	The percentage of $maxFee$ that clients can keep.
$clientTakeRate$	The percentage of $clientRate$ that the utilized client keeps.
$clientFee$	The amount the utilized client keeps in terms of the position's collateral token. $=maxFeeclientRateclientTakeRate$
$protocolFee$	The amount the protocol keeps. $=maxFee*(100\%-clientRate)$
$userSavings$	The amount that users of the utilized client save. $=maxFee(100\%-clientTakeRate)clientRate$

The following is an example calculation for a transaction where a user calls add using a client that has set their take rate to 90%, the current client rate is 30%, and the protocol fee rate is 0.3%.

$cAmt=\$1000$

$protocolFeeRate=0.3\%$

$clientRate=30\%$

$clientTakeRate=90\%$

$maxFee=\$1000*0.3\%=\$3$

$clientFee=\$3*30\%*90\%=\$0.81$

$protocolFee=\$3*70\%=\$2.10$

$userSavings=\$3*10\%*30\%=\$0.09$

$\therefore$ Instead of paying the maximum fee of $3.00, the user only paid $2.91.

How are fees calculated when `addLeverage` is called?

When addLeverage is called on a Position contract, its base token is used to borrow more debt token. A small amount of the debt token borrowed is taken as a fee.

Quantity	Description
$cTotal$	The total amount of collateral backing the position's loan on Aave (collaterall token + base token). Obtained by calling `getUserAccountData` on Aave's Pool contract (opens in a new tab).
$dTotal$	The total amount of debt the position has on Aave. Obtained by calling `getUserAccountData` on Aave's Pool contract (opens in a new tab).
$LTV$	The maximum loan-to-value ratio the position can have, given all of its current collateral on Aave. Obtained by calling `getUserAccountData` on Aave's Pool contract (opens in a new tab).
$dAmt$	The amount of debt token borrowed when calling `addLeverage`. $dAmt_{max}=cTotal*LTV-dTotal$ To minimize the risk of liquidation, $dAmt$ should be less than $dAmt_{max}$ .
$protocolFeeRate$	The maximum fee the user could pay, as a percentage of $dAmt$ . To get the current fee rate, call protocol fee rate on the `FeeCollector` contract.
$maxFee$	The maximum fee the user could pay, in terms of the position's debt token. $=dAmt*protocolFeeRate$
$clientRate$	The percentage of $maxFee$ that clients can keep.
$clientTakeRate$	The percentage of $clientRate$ that the utilized client keeps.
$clientFee$	The amount the utilized client keeps in terms of the position's debt token. $=maxFeeclientRateclientTakeRate$
$protocolFee$	The amount the protocol keeps. $=maxFee*(100\%-clientRate)$
$userSavings$	The amount that users of the utilized client save. $=maxFee(100\%-clientTakeRate)clientRate$

The following is an example calculation for a transaction where a user calls addLeverage using a client that has set their take rate to 90%, the current client rate is 30%, and the protocol fee rate is 0.3%.

$cTotal=\$5000$

$dTotal=\$2500$

$LTV=80\%$

$dAmt_{max}=\$5000*80\%-\$2500=\$1500$

$dAmt=\$1000$