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Trading fees

TACO charges a fee when you open, close, or reduce the leverage of a price position. (Liquidations are different — they take a liquidation incentive instead of the normal trading fee.) The base trading fee rate is capped at 5% by the protocol. For price markets, the open fee is deducted from the collateral you deposit before the remaining amount becomes position collateral. The close fee is deducted from the payout, and the remaining amount is then held in the pool’s settlement escrow until you withdraw it with a separate claimSettlement transaction. Cross-margin positions are the exception — their proceeds are credited directly to your margin account.

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Dynamic imbalance fee

When a market enables it, the effective fee rate moves with the pool’s long/short imbalance:
  • A trade that worsens imbalance (adding to the crowded side) pays more than the base rate.
  • A trade that improves imbalance (adding to the lighter side) pays less, down to a floor of zero.
The size of the swing is set per market by an imbalance multiplier (default ±50% of the base rate). At maximum imbalance the effective rate reaches base rate × (1 + multiplier) — so the effective rate can exceed the 5% base cap, because that cap limits the base rate, not the imbalance-adjusted rate.

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Where fees go

Each fee is split between the LP fee pool, the market creator, and the treasury. The split is configurable per market; by default the LP fee pool receives 60% and the creator share is zero until a creator fee is configured. Any share that is not assigned (no fee pool, or no creator set) falls to the treasury.

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vTACO discounts

If fee discounts are enabled, the trader’s effective fee rate depends on their virtual vTACO balance. vTACO is a time-decaying staking score, not an ERC20 token. The discount is tiered. By default there are nine tiers that rise with the vTACO you hold — from 5% off at the lowest tier up to a maximum of 90% off at the top tier. The discount is applied to the imbalance-adjusted rate, not the base rate, and if the discount lookup ever fails it falls back to no discount, so a discount problem never blocks your trade.
vTACO heldFee discount
10,0005%
25,00010%
50,00015%
100,00020%
250,00030%
500,00045%
1,000,00060%
2,500,00080%
5,000,00090%
These are the default tiers; a market can configure its own thresholds and rates (up to the 90% cap). Because vTACO decays with remaining lock time, it is meant to reflect current alignment rather than create a transferable staking position.

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Staking flow

  1. Stake TACO in TacoStaking.
  2. Lock it for a chosen period.
  3. Let the remaining lock time determine the vTACO balance.
  4. Use that balance to reduce trading fees through FeeDiscountModule.
Locked TACO cannot be withdrawn until the lock expires. As the remaining lock time decreases, the vTACO balance from that stake decreases too.

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LP rewards

Opted-in liquidity can participate in the fee pool. That reward flow is separate from the pool shares that track your underlying collateral. Rewards and discounts depend on the deployed modules and market configuration. They do not remove trading risk, LP risk, or smart contract risk.