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.

Example: Adaptive Fee Calculation in a Crypto Prediction Market

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%).

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.