Fee

DotSwap Nexus implements a flexible, transparent fee structure that adapts to different liquidity provision models while maintaining competitive rates and sustainable protocol development funding.

Dual Fee Model Implementation

The protocol operates two distinct fee models optimized for different operational approaches and user preferences:

DotSwap Pool (Custodial) Model:

• Customizable Total Fee: Initial liquidity provider sets pool-wide fee rate

• Protocol Share: DotSwap receives 1/5 (20%) of total fee through 4:1 ratio distribution

• LP Share: Liquidity providers collectively receive 4/5 (80%) of total fee

Operational Example: Initial LP setting 2% total fee results in 1.6% LP allocation and 0.4% protocol allocation

Nexus Node (Self-Custodial) Model:

• Variable LP Fee: Independently set by each Nexus Node operator based on strategy and market conditions

• Fixed Protocol Fee: 0.1% collected by DotSwap for infrastructure and development

• Total Fee Calculation: Node operator fee + 0.1% protocol fee

Operational Example: Nexus Node setting 1.5% LP fee results in 1.6% total fee (1.5% + 0.1%)

Fee Model Comparison and Competition

Model	Fee Setting Authority	Protocol Fee	LP Fee	Flexibility Level
DotSwap Pool	First LP decision	Variable (20% of total)	Variable (80% of total)	Pool-specific optimization
Nexus Node	Node operator	Fixed 0.1%	Operator choice	Complete autonomy

Market-Driven Fee Discovery

Competitive Dynamics: The protocol's multi-model approach creates natural competitive pressure driving fee optimization. DotSwap Pool fees respond to market demand and competitive positioning, while Nexus Node fees reflect individual operator strategies and service quality differentiation.

Quality Competition Framework:

• Superior execution quality justifying premium fees through better liquidity depth

• Advanced features and specialized services commanding competitive positioning

• Market reputation and reliability influencing user preference and fee tolerance

• Innovation rewards for technical improvements and enhanced user experience

Fee Distribution and Settlement

DotSwap Pool Distribution Process:

1. Total Fee Collection: Based on rate established by initial liquidity provider

2. Automatic Ratio Application: 4:1 split applied during trade execution

3. Proportional LP Allocation: 80% distributed based on exact liquidity contribution to specific trades

4. Protocol Treasury Allocation: 20% directed to DotSwap development and operational funding

5. Real-time Settlement: All distributions processed within trade execution transaction

Nexus Node Distribution Process:

1. Independent Fee Collection: LP fees collected directly by node operator according to published rates

2. Separate Protocol Collection: 0.1% protocol fee collected independently through system infrastructure

3. Direct Settlement: LP fees settle directly to operator-controlled wallets

4. Protocol Treasury Transfer: Protocol fees directed to development and infrastructure funding

5. Autonomous Processing: Each node manages fee collection and distribution independently

Competitive Market Analysis

Platform Type	Fee Setting Mechanism	Protocol Fee Range	LP Fee Range	Customization Level
DotSwap Pool	First LP market decision	Variable (20% of total)	Variable (80% of total)	Pool-specific strategy optimization
Nexus Node	Independent operator choice	Fixed 0.1%	Operator-determined	Complete strategic autonomy
Traditional Bitcoin DEXs	Platform-mandated rates	0.3-0.5%	0.2-2.5%	Limited volume-based tiers
Centralized Exchanges	Platform-controlled	0.1-0.5%	N/A (no LP model)	Volume-based institutional rates
Ethereum DEXs	Governance/LP decision	0-0.05%	0.25-1.0%	Community governance driven

Fee Transparency and Market Intelligence

Complete Market Visibility:

• Real-time Fee Display: Live fee rates visible across all pools and nodes before trade execution

• Historical Performance Analytics: Comprehensive tracking of fee evolution and LP return optimization

• Competitive Intelligence Dashboard: Direct comparison of fees across available liquidity sources

• Total Cost Calculator: Pre-trade estimation including all fee components and execution costs

Market-Driven Optimization Mechanisms:

• Natural Competition: Multiple liquidity sources create sustainable downward pressure on fees

• Quality Differentiation: Superior execution quality and service levels justifying premium fee positioning

• Innovation Incentives: Advanced features and technology improvements driving competitive advantages

• User Choice Optimization: Trader ability to select optimal liquidity sources based on individual priorities and requirements

Practical Fee Scenarios

Scenario 1: Conservative DotSwap Pool Operation

• Initial LP fee setting: 2.0% total fee

• LP share calculation: 1.6% (80% of total)

• Protocol share calculation: 0.4% (20% of total)

• Trade example (1 BTC): LP earns 0.016 BTC, Protocol receives 0.004 BTC

Scenario 2: Competitive Nexus Node Strategy

• Node operator LP fee: 1.2%

• Protocol fee (fixed): 0.1%

• Total effective fee: 1.3%

• Trade example (1 BTC): Node earns 0.012 BTC, Protocol receives 0.001 BTC

Scenario 3: Premium Service Node Positioning

• Node operator premium fee: 2.5% (specialized service/superior execution)

• Protocol fee (fixed): 0.1%

• Total effective fee: 2.6%

• Trade example (1 BTC): Node earns 0.025 BTC, Protocol receives 0.001 BTC