> For the complete documentation index, see [llms.txt](https://docs.timeless.market/llms.txt). Markdown versions of documentation pages are available by appending `.md` to page URLs; this page is available as [Markdown](https://docs.timeless.market/trading/fee-system.md).

# Fee System

The Adaptive Fee System in Timeless dynamically adjusts trading fees based on real-time market conditions - ensuring fairness, efficiency, and long-term sustainability for both traders and liquidity providers.\
This mechanism rewards users who provide liquidity early and minimizes costs for traders in high-volume markets.

<details>

<summary>Example: Adaptive Fee Calculation in a Crypto Prediction Market</summary>

**Scenario**

You are trading on a prediction market: **“Will Ethereum reach $3,000 by the end of this week?”** This is a **high-volume crypto market** with a **low spread** (around **0.05 USD1** difference between bid and ask).

**1. Placing a Limit Order**

**Trade Details** You place a **limit order** to buy **500 “YES” shares** at **0.6 USD1/share** (total = **300 USD1**).

**Adaptive Fee Calculation**

* **Fee:** 0% — Limit orders are always fee-free to encourage liquidity provision.
* **Rewards:**
  * Earn **daily USD1 rewards** (typically **0.2–0.8 USD1/day**, depending on market volume).
  * Receive **bonus points** (e.g., **\~500 points**) for participation in **Points Season 2 (22/09/2025–26/01/2026)**.
* **Reward Example:**
  * In a high-volume market (millions of USD1/day), your matched order could yield approximately **0.5 USD1/day** in rewards.

**⇒ Result** You pay **300 USD1** (order value), pay **no fees**, and **earn both USD1 and bonus points**.

**2. Placing a Market Order (High Liquidity Market)**

**Trade Details** You buy **500 “YES” shares** immediately at the market price of **0.62 USD1/share** (total = **310 USD1**). The Ethereum market has **high liquidity** and a **low spread (0.05 USD1)**.

**Adaptive Fee Calculation**

* **Fee:** Due to the low spread, the adaptive fee is minimal — assume **0.02%**.
  * Fee = **310 × 0.02% = 0.062 USD1**.
* **Fee Distribution:**
  * **Liquidity Providers (LPs):** 75% = **0.0465 USD1**.
  * **$TIME Holders:** 25% = **0.0155 USD1**.

**Total Cost** = 310 + 0.062 = **310.062 USD1**

**⇒ Result** A negligible fee aligned with Timeless’s **low-fee model**.

**3. Placing a Market Order (Low Liquidity Market)**

**Trade Details** You buy **500 “YES” shares** at **0.65 USD1/share** (total = **325 USD1**) in a **niche prediction market** - for example: *“Will DeFi TVL reach $200B?”* This market has **low liquidity** and a **wider spread (0.1 USD1)**.

**Adaptive Fee Calculation**

**Fee:** Due to low liquidity, the fee increases slightly - assume **0.15%**.Fee = **325 × 0.15% = 0.4875 USD1**.

* Fee = **325 × 0.15% = 0.4875 USD1**.
* **Fee Distribution:**
  * **Liquidity Providers (LPs):** 75% = **0.3656 USD1**.
  * **$TIME Holders:** 25% = **0.1219 USD1**.

**Total Cost** = 325 + 0.4875 = **325.4875 USD1**

**⇒ Result** The fee is higher than in liquid markets but still **lower than traditional AMMs (≈0.3%)**.

</details>

**Factors Influencing Adaptive Fees**

| **Factor**         | **Impact on Fee**                                                                                                   |
| ------------------ | ------------------------------------------------------------------------------------------------------------------- |
| **Bid/Ask Spread** | Higher spread → slightly higher fees (0.1–0.2%). Lower spread → near 0% fee.                                        |
| **Market Volume**  | High-volume markets (e.g., $400M+ total) enjoy lower fees due to abundant liquidity.                                |
| **Event Type**     | Popular markets (crypto, elections) have lower fees. Niche events (weather, culture) may have slightly higher ones. |
| **Gas Fees**       | Minimal on BNB Chain (<0.01 USD1), having little impact on overall cost.                                            |

**Fee & Profit Distribution Model**

| **Fee / Profit Type**                 | **Ratio (%)**          | **Recipient**                                   | **Notes**                                                                                                                     |
| ------------------------------------- | ---------------------- | ----------------------------------------------- | ----------------------------------------------------------------------------------------------------------------------------- |
| **Maker Fee**                         | 0% *(rebase model)*    | Liquidity Providers (LPs)                       | LPs earn yield by providing liquidity — no direct trading fee applied.                                                        |
| **Taker Fee (Adaptive Fee)**          | 0.1% – 0.5%            | LPs (85 – 90%)Protocol (10 – 15%)               | Fee collected from traders per trade pair. The percentage dynamically adjusts based on market volatility and liquidity depth. |
| **Gas Fee (BNB Chain)**               | \~ $0.03 per tx        | BNB Network                                     | Extremely low gas fees ensure accessibility and scalability for retail users.                                                 |
| **Curator Fee (Event/Game Creation)** | 10 – 20% of market fee | Curator                                         | Reward for community members who create and manage prediction markets — promoting a community-driven model.                   |
| **LP Reward Pool**                    | 100% of fee pool       | Liquidity Providers (distributed by LP share %) | Rewards distributed daily in USD1 based on contribution percentage.                                                           |
| **Future Token Staking Reward**       | TBD                    | Token Holders                                   | Post-TGE, staking rewards and revenue-sharing mechanisms will be introduced.                                                  |


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