Trading Fees / Incentives
Crypto
Summary of Fees and Incentives
Opening Fee (Fee) | 8-12 bps |
Closing Fee (Fee) | 8-12 bps |
Slippage | Zero for BTC, ETH, SOL! 2-6 bps for other assets |
Borrow Fees (Fee) | Based on the utilization of each asset |
Funding Rates (Incentive / Fee) | Based on skew and utilization |
Rebasing Yield (Incentive) | A novel Blast native incentive for loss protection |
Opening Fee: 0.1% * Position Size
Opening fee applies on the total position size of a leveraged trade. An example, if a trader puts up $100 of collateral at a 30x leverage, then the total position size would be $3,000. The opening fee would be deducted from the position size, e.g $3.0 (0.1% of $3,000). $97 is now the collateral value of the trade.
Closing fee: 0.1% * Adjusted Position Size
Closing fee applies to the adjusted position size of a leveraged trade, where:
Adjusted Position Size = Original Position Size + Gross PnL - Accumulated Borrow Fee + Funding Fees + Rebasing Yield
Most peer to pool perpetual protocols deduct closing fee upon opening an order, however the reason why we use the adjusted position size is to help traders save fees when they are in a loss, and protect LPs when traders are in profit. In the above example, if a trader puts up $100 of collateral at a 30x leverage, then the total position size would be $3,000. After deducting the opening fee (and assuming no change in the price of the underlying asset and no funding or rebasing yields), the leveraged position size with an accumulated borrow fee on the position of $10 is $(3000-10) =$2990. Hence, the closing fee is 2990* 0.1% = $2.99.
Spreads
Bloom offers zero slippage on the top 10 cryptocurrencies! We are currently charging 10 bps on any of our zero slippage assets.
Borrow Fees
A borrow fee applies to the collateral value of a position each block (and is displayed in a hourly format on the website). This is to make sure traders do not borrow most of the vault's capacity, and also leave room for other traders to take part in trading against the vault.
Hourly Borrow Fee = Base Fee* Blended Asset Utilization
Blended Asset Utilization = Category Utilization *0.75 + Asset Utilization *0.25
Category Utilization = USDB Borrowed for the Category/ USDB Limit for the Category
Asset Utilization = USDB Borrowed for the Asset/ USDB Limit for the Specific Asset
Rebasing Yield: Loss Protection for traders
The biggest value add of building on Blast is the ability to transfer claimable (rebasing) yield to and from LPs. Since Bloom traders borrow leverage from LPs, the protocol can customize when a trader gets an LPs claimable yield (~15% / year at current rates).
We call this "loss protection rebates". When a trader takes a bet, and is wrong on market timing (i.e price goes against them), Bloom gives a portion of yield on borrowed capital back to the trader. You might have commonly heard the phrase "losses hurt much more than profits feel good". This is called "loss aversion" and is one of the most common trading biases. Bloom gives back claimable yield to traders in a loss, providing strong downside hedge especially for high leverage trades. Providing this rebate does take away some yield from LPs, but it also increases vault utilization (because traders appreciate loss aversion), allowing for an effectively higher organic yield for LPs.
Note: We never give rebates more than a traders' gross PNL drawdown.
Example. Bob comes in with a $100 wager, at 50x leverage. His position size is $5,000. In one month, the price moves against Bob by 1%. This means he is now dow by $50! With loss rebates via claimable yields, Bob is eligible to get 5% / year on his position size (from LPs rebasing yield on USDB), which equates to $250 / year. Hence, theoretically, Bob can be covered for his gross PNL loss from claimable yield. Bob will still have to pay open fees and borrow / funding fees, ensuring he can never get away with a risk-free (lossless) trade! But loss rebates significantly hedge Bob's downside, making Bloom a very unique platform for high leverage trades.
Funding Rates
Funding fees help protect LPs and offer incentives to non-skewed traders. On Bloom - funding helps minimize the gap between long and short open interests to prevent very significant exposure on one side only on any trading pair. This protects both LPs, while incentivizing (or disincentivizing traders).
Calculation
There is a “funding fee per block %” which is applied to the net exposure of a pair.
Longs and shorts pay variable funding fees that rely on both the skew (directional open interest exposure) and utilization ("how much OI has been borrowed from the pool").
Long Funding Fees: (Asset Long OI-Asset Short OI)* Funding Parameter* MAX(Blended Utilization, Min Fee Parameter) / Asset Long OI
Short Funding Fees: -(Asset Long OI-Asset Short OI)* Funding Param* MAX(Blended Utilization, Min Fee Parameter) / Asset Short OI
Why do funding rates exist? As a short example, consider you are trading SOL-USD. While you are bearish on SOL and want to bet against its price, all other traders on Bloom are bullish SOL and are betting its price will go up. This means the market is "long-skewed", i.e most traders are long. This means, if traders are in fact right on their price prediction, liquidity providers will lose money.
To give additional incentive to you for opening a short trade and balancing the market skew, we offer you funding fees (interest on your position size) , while charging funding fees from long traders (interest on their position). This helps balance markets on Bloom, while ensuring fees remain low for directional traders.
Last updated