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Fees & Rewards

Fees and rewards are interwoven throughout most aspects of the protocol to encourage continued growth and development as well as attract liquidity to the platform.

Fees and rewards are closely related, as they both contribute to attracting and keeping users and liquidity on the protocol, but in slightly different ways.

Fees​

Fees are charged on every swap conducted that utilizes a ULX smart contract. These fees are then broken down into two parts, with one portion going to liquidity providers (LPs) and the other portion going to the ULX treasury to fund continued growth and further initiatives. The fee breakdown is as follows:

  • 0.3% is taken on every swap made on ULX - 0.2% of this fee is immediately redistributed to users in the form of LP rewards (more on these below) - 0.1% of this fee is sent to the ULX treasury

Rewards​

Rewards are given out to LPs as an incentive for them to provide their liquidity on ULX. Total reward amounts are pre-determined and are awarded in equal amounts daily. The amount of rewards an LP stands to receive is entirely based upon how many UxLP tokens they have, and their specific percentage of the pool.

For example, if an LP had UxLP tokens amounting to 3% of the ULX/ETH pool, they would be entitled to claim 3% of the daily ULX/ETH rewards in the pool. Though just an example, one can see how these rewards could add up very quickly if they were to stay vigilant. It’s important to note that one’s percentage of a pool is not fixed by any means; if another user came by and deposited more liquidity into the ULX/ETH pool, the first user’s percentage share of the pool would be diluted to a lower percentage, as there’s now more money in the pool.

Rewards are funded via swap fees (as noted above) and oftentimes also subsidized by individual teams in DeFi that are looking to drive more liquidity and action to their token. When a user decides to deposit their UxLP tokens into a farm and they see that they stand to earn two types of rewards ($ULX and one other token), this other token is supplied by the individual team in charge of it while ULX provides all of the $ULX rewards

The MasterChef contract is in charge of handling all rewards on Ultron