Does TangleSwap have any fees?
The IOTA technology as a foundation provides for 100% feeless, fast and secure transactions. Such inherent competitive advantage enables us to proudly operate with absolutely no fees to move digital assets around TangleSwap.
Completely unrelated to the groundbreaking feature of having no (decentralized) protocol fees, is the economic necessity to charge a swapping fee for users of the DEX. The reasoning in this regard is the same as for a traditional (centralized) exchange: liquidity providers need to be adequately incentivized to provide their liquidity to the protocol, thus enabling trading for all users of the platform. The beauty of a decentralized exchange is that these liquidity incentives are paid out directly by users, to other users — the liquidity providers. Benchmarking ourselves against industry-wide competitors, we have decided on an operational fee that keeps fees low, while supplying the minimum vital incentives for a long-term sustainable economic model. Importantly, said liquidity fee is also completely predictable: a fixed 0.25% trading fee, with no minimum amount.
In contrast, other DEXs in blockchain-based networks see themselves forced to impose a fixed+variable fee model to account for gas payments. With no lower fee limit, TangleSwap is among the first DeFi products ever to enable high-frequency trading bots & (micro)transactions of any size.
While this trading fee will initially go fully towards liquidity providers, as the DEX adoption progresses in the coming months and years, we plan for a fraction of trading fees to be gradually redirected to enable long-term sustainability of the platform and strengthen the tokenomics of our native VOID token. A potential long-term future distribution might look like this:
- 0.18% – Awarded to liquidity providers.
- 0.07% – Sent towards VOID buyback-and-burn.
IFOs and other events of temporary nature will also have small TBA operational fees.
It is important to note that all relevant parameters will ultimately be decided via VOID community governance at the TangleDAO, our dedicated DAO for the TangleSwap protocol.