Where the money goes
How fees, losses and liquidated margin are allocated, illustrated with a 100 USDT position.
Fees on a winning close#
The protocol fee is 2% of the gain that remains after the deadband and the impact scale. It is split equally between SPAPER stakers and the dev share, the half of fees that funds the operator. The dev share is allocated further off-chain: invite rebates (10% of the fees paid by invited traders), a SOLON buyback and burn (20% of the dev share), and operations (the remainder).
Example: Alice closes a winning position whose gain, after the deadband and impact scale, is 100 USDT.
| Recipient | Amount |
|---|---|
| Alice (98%) | 98.00 USDT |
| SPAPER staking pool (half of the fee) | 1.00 USDT |
| Dev share: inviter rebate (10% of Alice's fee) | 0.20 USDT |
| Dev share: SOLON buyback and burn (20% of dev share) | 0.20 USDT |
| Dev share: operations | 0.60 USDT |
fee = 100 × 2% = 2.00
stakers = 2.00 ÷ 2 = 1.00
dev share = 2.00 − 1.00 = 1.00
rebate = 2.00 × 10% = 0.20
buyback = 1.00 × 20% = 0.20
operations = 1.00 − 0.20 − 0.20 = 0.60
← Scroll sideways for long formulas
The SOLON buyback is 20% of the dev share, equivalent to 10% of total protocol fees, not 20% of the 2% fee.
Losses and liquidated margin#
Example: Alice loses 100 USDT, either on a losing close or through a liquidation that forfeits the whole margin.
| Payout queue | To the LP | Fee | Fee use |
|---|---|---|---|
| Empty | 98 USDT to LP cash | 2 USDT | Split as in the table above |
| Winners queued | 100 USDT, earmarked for queued winners | None | — |
LP cash is the only source from which future winners are paid. When winners are queued, the full amount is paid to them first-come, first-served.
In both cases Alice mints SPAPER on the basis of the loss net of any fee, at the current point on the mint curve: 98 × 100 = 9,800 SPAPER on the empty-queue path while net LP is below 2,000,000 USDT. Earlier losses mint more SPAPER per USDT than later ones. Minted SPAPER is held in Alice's wallet; staking it is a separate action.
Sources of staking yield#
SPAPER staking yield is paid in USDT from two sources, with no token inflation:
- half of every protocol fee;
- LP surplus, the part of LP cash above the reserve line (initially 5,000,000 USDT), distributed only while the payout queue is empty.
LP cash below the reserve line is not distributed; it is held to pay winners. The reserve line can be changed only through the 24-hour timelock, and any amount released by lowering it flows only to SPAPER stakers. See Staking dividends.
What SPAPER is not#
SPAPER cannot be transferred or sold. It is a claim on future protocol revenue, acquired by realising losses, not a token for trading.