Simple Summary

Introduce a nominal fee on orders through Kwenta to Synthetix v2 perpetual futures markets.

Abstract

Implement a 0.5bp (0.005%) fee on Synthetix v2 perps markets transactions.

Motivation

With Synthetix v3 and Perennial perps markets providing a more attractive option, Synthetix v2 perps markets will still require funding for maintenance. This proposal suggests a small "maintenance fee" for orders in Synthetix v2 perps markets, ensuring a continuous, high-quality trader experience and incentivizing Kwenta to support this older version. As Synthetix v3 and Perennial offer more lucrative incentives (20% and 35% fee share, respectively), focusing on them benefits the DAO. Nonetheless, a fee on v2 perps market orders will still provide value and encourage a gradual transition to newer versions.

Specification

A 0.5bp fee will be imposed on all orders in Synthetix v2 perps markets through Kwenta, adjustable based on governance decisions to align with Kwenta's incentives.

Configuration

This fee will be added through an update to Kwenta's Smart Margin v2 trading engine, recorded in the SMv2 Settings contract (Settings.sol), which manages conditional order executor fees and other configurations. Only the contract owner, the Kwenta pDAO multisig, can adjust the fee at present.

Integration

The fee, appropriately named orderFlowFee, will be incorporated into the order submission process at the SMv2 Account contract (Account.sol) level. This includes all SMv2-supported order types and SMv2's native conditional orders mechanism logic. The fee will be denominated in Synthetix v2 perps market's margin currency (sUSD). Depending on the order and market position, it will be deducted from the SMv2 account balance or, if insufficient, the market margin. If deducting a fee would result in an unhealthy position, the transaction will revert.