Protocol Fees and Incentives
Traditional uniswap based AMM, charge a swap fees of 0.3%, meanwhile swap fees for veSwap is just 0.2% for volatile swaps and 0.04% for stable swaps, some of the lowest available in DeFi, out of which the liquidity provider keeps 0.12%, the remaining is deposited to the treasury for continued protocol development.
If both tokens of a liquidity pool's pair are whitelisted by veVESW holders to be staked in gauges and receive VESW emissions rewards, then liquidity providers of that pair will not receive swap fees. The profits expected by the liquidity providers staking on gauges are solely derived from VESW emissions.
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In contrast veVESW Lockers who voted to incentivize a particular gauge with emissions will receive all the swap fees from the liquidity pair that they voted. This creates the incentives for veVESW lockers to vote for the gauges that produce the highest volume in swap fees. Through this mechanism, the system provides veVESW lockers with the power to incentivize swap fees instead of total liquidity. The destination of VESW emissions is in the hands of the lockers.
If a liquidity pool is not whitelisted to be staked in the gauge, it will receive all the swap fees it generates but have no VESW emissions.
Last modified 1mo ago