Detail of the fees for the use of the Geminon protocol
Geminon uses a system of variable commissions of its own design. Our contracts apply a system of progressive fees that increase with the size of the operation carried out (a higher commission is paid the larger the amount), with a double purpose:
- Make operating costs more equitable for users. In networks like Ethereum with a high gas price, small users suffer a much greater impact on their operations due to the transaction cost of the network. Geminon's variable fee system causes small transactions (<$1000) to pay only a small base fee, while large trades pay higher fees, which partly offsets the gas cost effect without hurting protocol revenue .
- Discourage the toxic flow of orders. In any system that carries out financial operations, large orders (in relation to available liquidity) tend to have detrimental effects on the system. The GLP liquidity algorithm penalizes this type of order and the variable commission system reinforces it and extends it to the rest of the protocol modules.
The total commission charged is calculated by adding the variable part (immutable) to the base fee (which is a configurable parameter of smart contracts). The latter is calculated by linear interpolation according to the following tranches:
- Below $1,000: No variable part, just the base fee charged.
- Between $1,000 - $10,000: from 0% to 0.05% plus the base fee.
- Between $10,000 - $100,000: from 0.05% to 0.1% plus the base fee.
- Between $100,000 - $1,000,000: from 0.1% to 0.2% plus the base fee.
- More than $1,000,000: 0.2% plus the base fee.
For example, for a base fee of 0.1%, the curve of fees based on the amount of the operation would be:
Value of the commission for minting GEX based on the amount in dollars.
Contrary to what happens with other decentralized projects, not all the commissions generated by the Geminon protocol go to the token holders, but an important part goes to the development team. This is so for several reasons:
- Given the characteristics of the project, the team has not reserved any percentage of the supply nor has external financing been received, so the only way to profit comes from operating margins and not from speculation, as happens in any traditional business.
- This system provides the right financial incentives for the team to stay committed to the project for the long term.
- It provides resources to the team that can be reinvested in the development of the project, generating sustainable, non-speculative growth.
The proportion of the commissions that the team receives is not fixed but depends on which protocol functions are most used by the users, so it cannot be known in advance. The following points explain this distribution in detail.
GLPs charge a commission when GEX is minted by depositing collateral and when GEX is redeemed for collateral. The full amount of the commissions generated in the GLP is for the team. The commission is made up of a basic rate, which is a parameter that can be modified by the team, and the variable part that is calculated based on the amount of the operation. The base fee is currently set at 0.1% to mint GEX and 0.2% to redeem it and can never be set above 0.5%. The variable commission ranges from 0 to 0.2%.
Charges a fee for minting and redeeming stablecoin. Unlike GLPs, SC Minter only collects for the team the base commission amount, which is 0.1% to mint stablecoin and 0.2% to trade stablecoin. The amount of the variable commission, which ranges between 0 and 0.2%, is received indirectly by the holders of the GEX token.
The Stableswap is the only module that does not collect commissions for the team. The full amount of the commissions generated is received indirectly by the holders of the GEX token. A commission is charged in each currency exchange that consists of a fixed part, which depends on the exchanged pair and that must always be greater than or equal to the sum of the minting and exchange commissions of the SC Minter (>= 0.3% ), and a variable part that depends on the amount of the operation and ranges between 0% and 0.2%. The stable coin exchange module implements a security system to prevent attacks by anticipating the oracle (front running) that charges an additional commission (Safety Fee) if it detects this type of attack to make it economically unfeasible. This commission is automatically calculated based on the attacker's expected profit to suppress it and therefore has no limit. For more information read the section about the Stableswap module:
This table shows the current value of the protocol fees. These fees can be modified at any time by the team if market circumstances require it.