Fee Calculation Example
A real-life calculation example for Layer-1 and Layer-2 fees
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: 200,000 USDT (will have to settle/send USDT to Broker B)
Broker B
Acts as Market Maker and is thus entitled to receive the Liquidity Fee
8 open State Channels = 80 bps 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 pay a total of USDT 200,100. Yellow Network will receive a total of 360 $YELLOW for the Reserve Vault.
The Liquidity Fee is charged automatically to the wallet of the Market Taker at the clearing.
The Clearing Fee is automatically charged to the $YELLOW wallet of both brokers at the clearing.
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