✨Fees & Rewards

Fees and rewards play integral roles within the protocol, strategically intertwined to foster ongoing expansion and advancement while also enticing liquidity to join the platform. Their relationship is symbiotic, working together to draw and retain users and liquidity within the protocol, albeit through distinct approaches.

Fees

Every swap using Donkey Finances incurs fees. These fees are divided into two parts: one part goes to liquidity providers (LPs), and the other part is allocated to the Donkey Finances treasury. The purpose of this breakdown is to support ongoing growth and other initiatives.

• 0.3% of each swap gets added directly into the liquidity reserves. This action boosts the value of liquidity assets, essentially serving as a payout to all liquidity providers based on their stake in the pool.

• Currently, out of the 0.3% swap fees, 0.05% will be allocated to the Donkey Finances Treasury, which is equivalent to 16.6% of the total fee. This deduction does not alter the fee paid by traders but does impact the amount received by liquidity providers.

• How can yield farming be used in this context?

Rewards

Rewards are distributed to liquidity providers (LPs) as an incentive for them to contribute their liquidity on Donkey Finances . The total reward amounts are predetermined and distributed equally daily. The reward an LP receives depends on their holdings of Donkey Finances assets and their proportionate share in the pool.

For instance, if an LP holds 3% of the DON/ETH pool's DONLP assets, it can claim 3% of the daily DON/ETH rewards from the pool. This scenario illustrates how rewards can accumulate rapidly with consistent participation. It's worth noting that an LP's share of the pool isn't fixed; if another user adds more liquidity to the DON/ETH pool, the original LP's share percentage will decrease as the pool's size increases.

Rewards are sourced from swap fees, as explained earlier, and are sometimes supplemented by DeFi teams aiming to attract more liquidity to their assets. In scenarios where users deposit DONLP assets into a farm and earn rewards in two types of assets($DON and another asset), the additional assets is provided by the relevant team, while Donkey Finances provides the $DON rewards. These are commonly known as Yield Farms.