💹Trading Fees

Trading fees for all Synths rise with increased market volatility and are funded using user collateral.

What are trading fees?

All Synths are automated asset management strategies that either utilize DeFi or CeFi components, such as trading on centralized exchanges. Each Synth incurs trading fees from the components it uses for execution.

How are trading fees funded?

The trading fees for each Synth are covered by the collateral provided by the user who minted it. If a Synth requires a minimum amount of collateral to achieve the user's desired exposure, the user may need to periodically add more collateral to maintain effectiveness. If not, the Synth will gradually reduce the user's exposure as trading fees diminish the collateral. This setup keeps the collateral risk for each Synth specific to the user who created it through the Umoja dApp or API.