Fee structure & Comparison

Basic Economics

Wondering how much it costs to trade this perp if you do win? Well, profit sharing (win-fees) vary based on one important outcome: what is your ROI?

Zero-fee perps are designed to reward higher returns: As your ROI increases, you keep a larger percentage of your profits. Profit sharing can be as low as 2.5% of your gross profits. This is to encourage traders to cash out when they’re the most in profit, while also ensuring LPs are fairly compensated for allowing traders to scalp in and out of positions without paying any fixed or borrowing fees.

ZFP traders keep more of their profits, the higher their ROI is. On average traders keep ~85%+ of their profits without paying anything upfront.

Fixed Fees vs Zero-fee perps: Quantitative modeling

Another interesting way to understand whether you’d want to stick to fixed-fee trading or trade zero-fee perps, is by looking at net PNL for zero-fees vs fixed fees perps (in relation to the underlying crypto asset’s price moves and leverage). It’s important to do this under some core assumptions (Avantis’ trading terminal also has a live calculator where you can enter these variables).

1. Zero-fee perps

   1. Zero fees for losing trades.

   2. Variable profit-sharing (win-fees) as low as 2.5% of gross PNL, based on ROI. As your ROI increases, you keep a larger percentage of your profits.

2. Fixed fees

   1. 0.06% open / close fees for BTC (charged on position size).

   2. Borrow Fees: 10% APR, charged on position size.

3. Spreads: The same dynamic spreads that apply to fixed-fee perps, also apply to Zero-fee perps.
4. Duration: In both cases, let’s assume the trade is open for 7 days.

5. Collateral / Leverage: Trader has $100 in collateral, with varying degrees of leverage (anywhere from 10x-100x).

6. Underlying price move (for the asset in question, eg BTC) has been shown to vary from 0.05% to 25%.

Fixed-fee perps vs zero-fee perps

Key Takeaways

🔴 With fixed fee perps, you need a much larger price move to even break even.

🟢 However, with zero-fee perps, small price moves can still be profitable, making it a far better model for most traders, especially loss-averse traders.

🔴 With fixed fee perps, position decay is much higher given borrow fees eat into collateral over time. The above analysis only assumes that a position is held for 7 days, but the impact is much larger for longer holds.

🟢 Zero-fee perps have zero borrow fees, allowing traders to hold positions for much longer without any change in liquidation price.