# Fees

The Dexodus protocol is designed to offer traders a cost-efficient and seamless experience by eliminating gas fees while maintaining a fair and transparent fee structure for perpetual trading. This section explains how fees work within Dexodus, their types, and their distribution.

#### **1. Gasless Trading**

Dexodus eliminates gas fees for traders by leveraging **account abstraction** through the Dexodus Account system. This means traders can execute trades without needing to hold ETH for gas, providing a smooth and cost-efficient user experience. Gas fees incurred by the protocol are covered by Dexodus, enabling gasless and frictionless trading for all users.

#### **2. Trading Fees**

Trading fees are applied to all trades executed on the platform and are divided into **open/close** and **execution** fees, based on the type of order placed:

**Open/Close and Execution Fees**

* **Open/Close Fees:** Applied to traders when requesting to open or close a perp position.
  *  **Fee:** 0.01% of the trade size value.
* **Execution Fees:** Applied to traders when any trade is executed successfully.
  * **Fee:** 0.035% of the trade size value.
* **Market-Specific Adjustments:** Open/Close and execution fees may vary depending on the market, offering flexibility to align with trading activity and market demand.

**Fee Distribution**

Fees generated from trading activity are distributed as follows:

* **75% to Liquidity Providers:**
  * As a reward for providing liquidity, 75% of all trading fees are allocated to LPs in the weighted liquidity pool.
* **25% to the Dexodus Treasury:**
  * The remaining portion is directed to the protocol treasury to support ongoing development, operations, and incentives.

#### **3. Funding Fees**

Funding fees are an essential mechanism in perpetual trading, designed to align the perpetual market price with the index price by encouraging balance between long and short positions.

**How Funding Fees Work**

* **Paid Periodically:** Traders holding positions (long or short) pay or receive funding fees based on the open interest imbalance between the two sides.
* **Counterparty Alignment:** Funding fees ensure that if one side of the market is overrepresented, traders on that side pay fees to the other side, encouraging a balanced market.

**Fee Distribution**

Funding fees are distributed as follows:

* **80% to Counterparty Traders:**
  * Most of the funding fees are directly paid to traders holding positions on the opposite side of the market, encouraging fair PnL outcomes.
* **20% to Liquidity Providers:**
  * A smaller portion is allocated to LPs, rewarding them for supporting the market's liquidity needs.

#### **Why This Fee Structure?**

1. **Trader Benefits:**
   * By covering gas fees, Dexodus ensures a streamlined trading experience with no hidden costs.
   * Fair maker and taker fees incentivize both active trading and liquidity contribution.
2. **Liquidity Provider Incentives:**
   * LPs are rewarded with a significant share of trading and funding fees, encouraging long-term participation in the liquidity pool.
3. **Market Stability:**
   * Funding fees create a self-correcting mechanism to maintain market balance, reducing risks of open interest imbalances.
4. **Protocol Sustainability:**
   * The treasury’s share of trading fees ensures the protocol remains well-funded for ongoing development and growth.