Convexus offers LPs three separate fee tiers per pair:
0.05% for correlated asset pairs
0.30% for uncorrelated asset pairs
1.00% for volatile asset pairs
This array of options ensures that LPs tailor their margins according to the expected pair volatility. LPs take on more risk in uncorrelated pairs and, conversely, take on minimal risk in correlated pairs such as stablecoin pairs.
Although distinct fee tiers may lead to some degree of liquidity fragmentation, most pairs will calibrate to an ‘obvious’ fee tier.
We expect correlated asset pairs such as bnUSD/IUSDC to congregate around the 0.05% fee tier and uncorrelated asset pairs like ICX/IUSDC to use 0.30%, while volatile asset pairs such as GBET/ICX might find 1.00% swap fees more appropriate. Governance can add additional fee tiers as needed.