Comment on page
An overview of the trading and sequencer fees charged on Vertex.
Trading fees are a standard feature of any exchange venue. Fee models vary between exchanges but are generally charged:
- 1.As a percentage of the total value of a trade.
- 2.Each time an order is executed.
On a decentralized exchange (DEX), trading fees serve several core functions, including:
- Generating protocol revenue.
- Providing an economic incentive for market makers to provide liquidity.
- Modulating speculation and manipulation of specific trading pairs.
As a hybrid orderbook-AMM with an integrated money market, Vertex’s fee model applies to:
- AMM Liquidity Pools
- Borrow/Lend Pools
- The Sequencer’s Central-Limit Orderbook (CLOB)
As a result, the four primary market participants on Vertex with an impact from fees include:
- 1.Price Makers
- 2.Price Takers
- 3.Liquidity Providers (LPs)
- 4.Borrowers & Lenders
Each specific market participant is defined below within the context of Vertex’s fee model.
Price Makers: Makers provide liquidity to the protocol by placing resting limit orders (e.g., bids and asks) on Vertex’s orderbook. Makers augment the liquidity of an exchange and play a critical role in minimizing spreads and slippage by providing liquidity to takers.
Price Takers: Takers remove liquidity from the orderbook by buying and selling assets via market orders. Takers remove liquidity from the exchange by crossing the spread and accepting liquidity as offered by price makers.
Liquidity Providers: Commonly known as LPs, liquidity providers are the suppliers of liquidity in Vertex’s AMM asset pools (e.g., ETH/USDC), deploying an equivalent USD value of each asset in the pool’s trading pair to earn a proportional percentage of the pool’s trading fees as revenue. LPs are subject to impermanent loss (IL), where volatility in an asset’s price in a given liquidity pool causes an LP’s proportional share of the liquidity pool to be worth less than the present value of their deposited assets into the pool.
Borrowers & Lenders: Asset pools for borrowing and lending on Vertex’s money market comprise debtors (borrowers) and creditors (depositors) for a given spot asset. Depositors are the liquidity providers to the pool, earning a proportional share of the prevailing interest rates borrowers pay. The money market enables borrowing/lending for a specific asset at the prevailing interest rate in the pool – with interest rates a function of both the demand to borrow and the liquidity of the asset pool.
Price Makers, LPs, and Lenders occupy a special class of users: supplying Vertex with liquidity. While providing liquidity, they take on particular risks – such as impermanent loss (IL) for LPs or capital and opportunity costs for Price Makers and Lenders.
To enable cheap and efficient trading for users in the greatest volume possible, Vertex aims to promote liquidity, defined as:
- Tight Spreads
- Low Slippage
Price Makers, LPs, and Lenders deliver value to Vertex by contributing liquidity to the protocol and enabling lower costs for price takers. Vertex will promote stronger incentives for these liquidity providers to maximize the DEX’s effectiveness as an exchange venue.
Below, we categorize the trading fee model on Vertex, which includes:
- A competitive maker/taker fee model.
- Fee-based rebates for market makers.
- VRTX token incentives.
High fees typically characterize most decentralized exchanges.
Vertex is different.
Vertex’s trading fee model is competitive with centralized crypto exchange venues – offering cheap trading for takers and zero fees for makers on major pairs like BTC/USDC and ETH/USDC for both spot and perpetuals.
Specific to Vertex’s orderbook, the maker/taker trading fee model is displayed below.
Vertex's Maker/Taker Fee Structure
Note: the following fee structure will be live on Wed Dec 13th, 2023 at 10pm EST.
- Minimum Taker Fee: Upon matching, every taker order is subject to an immediate fee. This fee is calculated based on the formula:
minSize × maker.price × feeRate
- No Fees Interval: For the initial part of the order, specifically
[0, minSize), there are no fees charged.
- Standard Fee: For any portion of the order amount that exceeds
minSize, a standard fee is charged based on the formula:
quoteAmount × feeRate.
Vertex’s trading fee structure is supplemented by the Vertex Maker Program, a rebate-based trading fee incentive program for price makers that contribute in excess of 0.25% of maker volume in a given epoch.
- 1 Epoch = 28 Days
Trading fee rebates for the Maker Program are displayed in the table below.
Maker fee Rebates on Vertex
Additionally, the Maker Program offers VRTX token incentives allocated to a scoring function that prioritizes:
- Market Support
The scoring function is as follows:
The minimum depth and maximum spreads per market are as follows:
- $25K for stables.
- $5K for core markets (BTC & ETH).
- $2.5K for alt markets (non-BTC & non-ETH).
- 10 bps for stable.
- 30 bps for core markets (BTC & ETH).
- 50 bps for alt markets (non-BTC & non-ETH).
NOTE: Max spreads for core markets (BTC & ETH) were recently increased from 20 --> 30 bps. Additionally, max spreads for alt markets were increased from 40 --> 50 bps.
All trading fees on Vertex are paid in USDC. Initially, all trading pairs on Vertex will be denominated in USDC – such as BTC/USDC spot and perpetuals.
Initially, trading fees classified as protocol revenue will be routed to secure the protocol in the months after launch, which will finance a few key areas, including:
- Insurance Fund -- This will be supplemented by trading and liquidation fees to ensure orderly bankruptcies on Vertex.
- Ongoing Expenses -- Vertex will have ongoing costs, such as marketing and development, that must be paid in stables.
- VRTX Liquidity -- USDC will be needed to seed the initial liquidity pool.
Vertex charges a flat fee for interactions with the Vertex Sequencer, denominated in USDC, to compensate for the gas paid to the underlying blockchain while allowing for a faster trading experience via lightning-fast order matching.
Vertex’s sequencer interacts with the underlying blockchain, Arbitrum, matching inbound orders into the protocol. But it also serves as the route for other high-speed interactions such as rapid deposits, withdraws, LP minting, and more.
If you don’t have USDC in your subaccount, either a loan will be taken out or the transaction will fail, depending on whether spot leverage is enabled.
Of note, sequencer fees are approximate values for withdraws and deposits denominated in the corresponding asset. Fees are subject to change over time as gas fees and other variables are adjusted, but they should remain relatively stable within months of launch.
The sequencer fees are as follows:
- Deposit = 0 USDC
- Submitting a Liquidation = 1 USDC
- Withdrawing Collateral:
- BTC = 0.00004 BTC
- ETH = 0.0006 ETH
- USDC = 1 USDC
- Placing an order that takes liquidity from the book = 0.1 USDC*
- Minting/Burning LP Tokens = 1 USDC
*11/09/2023: Currently in effect and continuing throughout the next 12 weeks (Epochs 8, 9, and 10), sequencer fees charged on any order that takes liquidity from the book will be reduced from 0.1 USDC --> 0 USDC for all Vertex markets.
Limit orders and takers aren't mutually exclusive, so sequencer fees may still apply to specific limit orders. For example, a trader might place a limit order that does not immediately match any existing orders, adding liquidity to the market. Later, the same trader might execute a market order or a limit order that matches an existing order, taking liquidity and acting as a taker that is charged a sequencer fee.
Sequencer fees are only charged if the operation is successful. For example, if you submit a collateral withdrawal request that causes your account to be under-collateralized, you will not be charged fees for the failed action.
Vertex’s sequencer handles user interactions with the blockchain. As a result, users' sequencer fees are paid in lieu of gas and are akin to some combination of gas and “clearing fees” on a traditional exchange.
Withdrawals: Vertex minimizes user fees by sending transactions on Arbitrum when gas fees are low. All actions on Vertex still happen instantaneously, but withdrawals can take up to 30 minutes or longer during high gas periods. The 30-minute timeframe is the targeted maximum that a withdrawal will remain pending, as Vertex usually sends the transaction to Arbitrum after this time automatically -- even during high gas periods. If your withdrawal takes longer, it may be due to persistent and excessively high gas costs.
NOTE -- If your withdrawal appears on the Vertex app, that means it was successfully placed and will settle on-chain once gas costs come down or if gas is already below the target threshold at the time of your withdrawal. Please note that withdrawal times may still be variable as we optimize the automated mechanism to account for dynamic changes in gas costs.
To track withdrawals' status, visit the Portfolio page's Account History section.