Lending Pool Fees
There are three total fees for every lending pool.
Interest Rates
Swap Fees
Flash Fees
Interest Rates
Interest Rates can be entered as a custom graph created in our website. An example is below.
The interest rate curve here is used to determine the interest that is charged to the borrower for the loan. The interest rate is effectively a percentage of the provided capital that is charged to the lender every year. The interest does NOT get compounded.
Example: A user borrows $100 from a lender with a 10% interest rate. SandCastle would effectively add $10 in debt to the user's position every year.
Swap Fees
These fees only apply to V3 positions not regular loans or flash loans.
A Swap fee is essentially a percentage of the total amount of swap fees that a user receives. So a swap fee of 10% would mean that the lender receives 10% of the fee income that a user gets. Note that this does not account for rewards from systems like Merkle.
Example: If the total amount of swap fees collected by the user is $100, and the swap fee of the lender is 10% then the fees collected by the lender is $10. So the user would end up with $90 and the lender with $10.
Flash Fees
A user can set a fee for flash loans. The flash fee is how much of the flash loan the lender receives as a fee.
Example: If a user uses a flash loan to acquire $100 and the flash fee is 1.5%. Then, the fee collected by the lender is $1.5. Essentially the user must pay $1.5 in fees to acquire $100 in a flash loan.
Last updated