Fee Calculation Example

Pre-Defined parameters (Assumptions)

  • Liquidity Fee is charged at the end of each clearing cycle
  • Clearing Fee is charged at the end of each clearing cycle
  • Liquidity Fee as agreed between Brokers is 0.01%
  • Price BTC/USDT = 20,000
  • Price $YELLOW/USDT = 10
  • Transaction; Broker A buys 20 BTC vs. USDT from Broker B
  • Agreed Liquidity Fee between Brokers = 0.05%
Broker A
  • Acts as Market Taker and is thus subject to pay the Liquidity Fee
  • 4 open State Channels = 100 bps Clearing Fee
  • Liability Broker A; USDT 200,000 USDT (will have to settle/send USDT to Broker B)

Broker B

  • Acts as Market Taker and is thus entitled to receive the Liquidity Fee
  • 8 open State Channels = 80bps Clearing Fee
  • Liability Broker B; 10 BTC (will have to settle/send BTC to Broker A)
Fee Calculation
  • Liquidity Fee Broker A = 200,000 x 0.05% = 100 USDT
  • Clearing Fee Broker A = 200,000 / 10 x 1% = 200 YELLOW
  • Clearing Fee Broker B = 10 x 20,000 / 10 x 0.8% = 160 YELLOW

Settlement Amounts

Currency
Broker A
Broker B
BTC
+10
-10
USDT
-200,100
+200,100

Fee Payment Cash Flow

Type
Broker A
Broker B
Period
Liquidity Fee (L1)
-100 USDT
n/a
On Settlement
Clearing Fee (L2)
-200 $YELLOW
-160 $YELLOW
On Settlement
Broker A will receive a total of 10 BTC on settlement and paying a total of USDT 200,100. The Yellow Network will receive a total of 360 $YELLOW for the Reserve Vault.
  • The Liquidity Fee is charged automatically to the wallet of Market Taker at clearing.
  • the Clearing Fee is automatically charged to the $YELLOW wallet of both Brokers at clearing.
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