DEX Fee Structures

DEX fee structures define how costs are distributed among traders and liquidity providers within a decentralized exchange. Typically, a small percentage of every trade is deducted as a fee, which is then distributed to those who have contributed capital to the liquidity pool.

Some protocols also implement governance tokens that can be used to reduce trading fees or vote on changes to the fee model. Understanding these structures is crucial for liquidity providers, as the fee revenue must exceed the potential for impermanent loss to make the investment profitable.

Variations in volume and volatility directly impact the earnings potential of these fee-based systems.