;
};
The Space Dynamic Fee Curve is designed as an incentive alignment mechanism for [makers & takers](/concepts/makers-takers) which uses fee asymmetry in order to achieve the following:
* Reward early participation, conviction and risk taking
* Maintain orderly books
* Reward makers for providing deeper liquidity (see: [rewards](/features/rewards))
* Incentivize consistent, long term participation
* Punish market manipulation
Traders adding liquidity to the order book via limit orders (makers) pay 0 fees. The below fees only apply to market orders that get filled instantly (takers)
1. **Buy Fee**: when a market order position is opened, fees start higher during uncertain phases of the market where your odds are highest and gradually decrease as the market gains more certainty
$$
F_{\text{buy}} (p) = F_{\text{min}} + (F_{\text{max}} - F_{\text{min}}) \times (1-(p/100)^{\alpha})
$$
where
* $F_{\text{buy}} (p)$: Buy-side fee at probability $p \%$
* $F_{\text{max}} = 2.00\%$: Maximum fee at $0\%$ probability (highest uncertainty)
* $F_{\text{min}} = 0.02\%$: Minimum fee at $100\%$ probability (certainty)
* $\alpha = 1.3$: Curve-shape coefficient (controls smoothness of decline)\
\
**Example:** \
At $p = 20\%$, $F_{\text{buy}}(20) \approx 1.76\%$ but you're buying contracts that could pay out \$1 (400% ROI) so your odds are better \
At $p = 80\%$, $F_{\text{buy}}(80) \approx 0.10\%$ you'll pay a 0.05% buy fee but your upside is smaller at \$0.25 (25% ROI) as your odds are worse
2. **Sell Fee:** if you wait until the market is resolved or you place a limit order to exit that doesn't get triggered immediately you are a maker and therefore do not pay any fee. However, if you want to close your position early via a market order, you need to understand that fees peak near the midpoint (at 50% probably or \$0.50) where uncertainty and volatility are highest; neither YES or NO sides have a clear informational advantage. This is the point where price manipulation and short-term flipping are most likely to occur therefore in order to protect market integrity and stabilize pricing, fees are highest (1%) and taper off towards either side as outcomes become more certain (0.02%).
$$
F_{\text{sell}} (p) = F_{\text{min}} + (F_{\text{peak}} - F_{\text{min}}) \times e^{-0.5 (\frac{p-50}{\sigma})^2}
$$
where
* $F_{\text{sell}} (p)$: Sell-side fee at probability $p \%$
* $F_{\text{peak}} = 1.00\%$: Maximum fee at $50\%$ probability (maximum uncertainty)
* $F_{\text{min}} = 0.02\%$: Minimum fee at $100\%$ probability (certainty)
* $\alpha = 1.3$: Curve-shape coefficient (controls smoothness of decline)
At \$0.50 (50% probability) your sell fee is 1%
At \$0.20 (20% probability) your sell fee is approximately 0.12%\
\
**Example:**\
You wish to enter the trade below via a market order (if you entered via limit order you wouldn't pay any fee).
| | **Value** |
| -----------------------------: | ---------------------------------------------- |
| **Order Type** | Market (fee applies; limit orders have no fee) |
| **Market** | "Will BTC close above \$150,000 this year?" |
| **Current BTC Price** | \$125,000 |
| **Current Market Probability** | 30% |
| **Shares to Buy** | 1,000 YES shares at \$0.30 |
* Position size: 1,000 x \$0.30 = \$300
* Buy fee ≈ 1.6% (\$4.80)
* **Total cost:** \$304.80
* BTC rallies to \$145 and market probability rises to 80%
* Sell price: \$0.80 x 1,000 = \$800
* Sell fee ≈ 0.04% (\$0.32)
* Net proceeds: \$799.68
* **Net profit:** \$800 - \$0.32 - \$304.80 = \$494.88 (162% ROI)