Where earnings come from
You earn your position's fee every time a swap fills against it. Fees are paid in the swapped tokens, straight to your wallet, where they immediately back your positions as fresh liquidity.
Setting your fee
- Auto: Aqua pre-fills a fee for the pair. Keep it once reviewed.
- Presets: common tiers for the pair type.
- Custom: undercut market fees to win volume, or premium-price scarce pairs.
The fee and volume trade-off
A higher fee pays more per fill but wins fewer fills. Research on Uniswap measured how sharply this bites: pools on higher fee tiers held 58% of liquidity while executing only 21% of swap volume, so much of the most expensive liquidity rarely filled. On Aqua the trade-off is per position and reversible: start from the default fee, undercut it to win volume for the pair or price a scarce pair at a premium. Adjusting later means closing and reopening, and tokens never move on close.
The 1inch DAO protocol fee
Your swap fee does not all go to you. Each new position includes a protocol fee that goes to the 1inch DAO treasury: a quarter of your swap fee on lower fee tiers and a sixth on higher tiers, from about 0.12% upward. The share is set when the position is created and is applied automatically on each fill. It comes out of the fees you earn, so the price your counterparty pays is unchanged. The protocol fee is set by 1inch DAO governance, is solely under the DAO's control and can be changed by the DAO at any time.
| You keep | Goes to the 1inch DAO | |
|---|---|---|
| Fee tiers up to about 0.12% | Three quarters of the swap fee | A quarter of the swap fee |
| Fee tiers above about 0.12% | Five sixths of the swap fee | A sixth of the swap fee |
Reading APR
APR on Aqua annualizes fee income against the value backing a position: the fees from a recent window, scaled to a full year's rate. In the dApp, the same number is labeled APY, and you pick the window it covers. It moves with volume and with your range. It is an observation, not a promise.
- Fee income
- Paid per fill, in the swapped tokens, to your wallet
- Protocol fee
- A quarter of your swap fee on lower fee tiers, a sixth on higher tiers, sent to the 1inch DAO on each fill
- Compounding
- Automatic: the wallet balance is what positions quote against
- Gas
- You pay gas to open and close. There is no deposit/withdraw cycle
