Fee Structure

Bug Finance's fee structure is designed to ensure a balance between rewarding users, supporting early supporters via The Swarm NFTs, and maintaining the platform's sustainability. Here's a detailed breakdown of the fees:

  1. vAMM and sAMM Fees:

  • vAMM fees are set at 0.3%

  • sAMM fees are set at 0.04%.

  • Certain BUG NFT holders receive a reduced fee of up to 50% across all LPs.

  • LPs paired with $BUG receive a reduced fee of 0.25% instead of 0.3%.

  1. Fee Distribution:

  • veBUG Holders: At first, 80% of the fees are distributed among veBUG holders to incentivize voting. This percentage increases to 90% after 6 months. veBUG holders receive the fees of the pool they are voting for.

  • The Swarm NFTs: Initially, 20% of the fees are allocated to The Swarm NFTs. This percentage decreases to 15% after 3 months and 10% after 6 months.

Exit mechanism veBUG, Boosted Staking & Single Sided Staking

As mentioned before, staking LP into veBUG can be seen as riskier than locking up the governance token itself. To combat this we created an exit mechanism feature for veBUG.

What are we trying to achieve?

  1. We want to give people a reasonable option to exit, which makes it more attractive to lock in the first place

  2. If people exit, it shouldn't destroy the flywheel. So there are counterforces to unlockers.

This is why we created an exit mechanism. It will work like this:

There is a 20% exit fee at day 0 of staking, decreasing to 2.5% over 1 year, at a rate of 0.33% per EPOCH. Meaning the exit fee decreases by 0.33% weekly to end up at 2.5%. How will the exit fee be used?

  • 40% will go to bribes for the pool that was exited. This bribing will not be done all at once, instead, it will be distributed over 4 weeks to create a more even APR.

  • 40% will go to the lock bonus for the pool that was exited. Everybody who locks up LP for veBUG in that pool will receive a 2% bonus on their LP & veBUG as long as the supply lasts.

  • 20% will go to Protocol owned Liquidity.

This creates a system where someone exiting increases Protocol owned Liquidity (which makes the protocol forever stronger), increases yields for people voting in that pool and thus liquidity providers, and incentivizes new people to jump into the pool for the bonus. And if they decide they want to exit, everybody benefits again.

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