An Automated Market Maker (AMM) fee structure defines the costs associated with trading digital assets on a decentralized exchange. These fees are typically a percentage of the trade value, paid by users who swap tokens. The collected fees often compensate liquidity providers for their capital contributions. Different AMMs implement varying fee rates and distribution models.
Context
The AMM fee structure is a critical element influencing liquidity provision and trading activity within decentralized finance (DeFi) protocols. News frequently reports on adjustments to these fees, as they directly impact profitability for liquidity providers and overall transaction costs for traders. Debates often arise regarding optimal fee levels to balance capital efficiency, protocol revenue, and user experience. Changes can significantly alter market dynamics and competition among decentralized exchanges.
A new mechanism auctions a guaranteed time advantage for transaction inclusion, transforming competitive latency-based MEV extraction into an economically efficient, auction-driven value capture system.
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