Fee tier

SuperSwap offers liquidity providers a choice of multiple fee tiers for each pair, including 0.008%, 0.045%, 0.3%, and 1%. This range of options allows LPs to align their profit expectations with the anticipated volatility of each trading pair. For pairs with higher expected volatility, like ETH/USDC, LPs can opt for a higher fee tier to compensate for the increased risk. Conversely, for more stable, correlated pairs like USDT/USDC, LPs can choose a lower fee tier, reflecting the reduced risk involved.

In addition to these fee tiers, SuperSwap has the flexibility to introduce additional tiers based on market trends and specific demands for different tokens and pools. These allow SuperSwap to dynamically adjust to changes in trading behavior and asset volatility, ensuring optimal performance and competitiveness.

While offering multiple fee tiers may fragment liquidity initially, it's expected that each pair will naturally gravitate towards a dominant fee tier, eventually becoming the primary market for that pair. For example, similar asset pairs might favor the 0.008% tier for its low impermanent loss, while pairs like ETH/USDC could align with the 0.3% tier, and exotic assets might prefer the 1% tier. If necessary, governance can introduce or adjust additional fee tiers to keep the system competitive and flexible.

Fee Tiers Explained:

• 0.008% Trading Fees: Ideal for stable pairs like USDT/USDC, where low impermanent loss is expected. This tier attracts both traders and LPs due to the combination of minimal fees and price stability, making it a go-to option for low-risk trading.

• 0.045% Trading Fees: Suited for moderate volatility assets, this tier balances fee revenue with the need to attract liquidity. It’s designed for assets with a higher risk than stable pairs but still sees reasonable trading volume, providing a middle ground for LPs.

• 0.3% Trading Fees: This tier is reserved for exotic or less liquid assets, compensating LPs with higher fees due to lower trading frequency. It ensures that LPs are fairly rewarded for providing liquidity to riskier or less-traded pairs.

• 1% Trading Fees: The highest tier, targeting rarely traded assets that involve significant impermanent loss. This tier offers substantial incentives for LPs to provide liquidity in high-risk scenarios, balancing the higher risk involved with a much greater reward.

• Additional Fee Tiers: SuperSwap dynamically adjusts and introduces additional fee tiers based on market trends and token demand, ensuring liquidity and rewards are optimized for every trading scenario.

Each token pair can have liquidity pools across all fee tiers, though it's expected that liquidity will naturally concentrate in the tier that best matches the interests of both LPs and traders. For example, low-volatility pairs may gravitate toward the 0.008% tier, while high-risk, low-volume assets may find their sweet spot in the 1% tier.

The overarching goal of these varied fee tiers is to create an optimal balance between low fees for traders and strong liquidity incentives for LPs, ensuring a competitive, capital-efficient trading environment across the entire Superchain ecosystem. By offering this flexibility, SuperSwap can cater to the diverse needs of the market, making it the most efficient liquidity network across the Superchain.