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As i know, Sushiswap is collecting a 0.3% fee that is then divided into two parts

  • 0.25% goes to LP providers
  • 0.05% goes to treasury for burn

note, 0.5% isn't indicated but I suppose that's the case after looking at code const BASE_FEE = new Percent(JSBI.BigInt(30), JSBI.BigInt(10000)) and 0.05% has to go somewhere, pancake is burning it for example

Now, As I mentioned above, the fee is defined in frontend code, JSBI.BigInt(30). But I can't find where are they splitting this 30 fee.

There is a code in the backend, a formula that is also stated in Uniswap whitepaper (v2), That might be doing job. They've mentioned 1/6 of growth in sqrt(k) that initially I didn't understand whats how is that related to formula or this fee distribution (yeh, I'm dumb at math things).

My deduction is this - 1/6 (that is roughly 1.16) multiplied by 0.3%, their initial fee and you get 0.048 that is 0.05 right? and since the treasury fee is 0.05 as well, is this the case?

For recheck, I did the same for pancakeswap, which is collecting 0.2% JSBI.BigInt(20) fee, doing same as above you get 0.032 that is 0.03, and their treasury distribution is 0.3%.

I know, I might be looking at big coincidence or just number play that might sound a bit stupid for experienced developer, but I will take a risk to ask - In code, Where is shushiswap or uniswap 0.3% fee is divided into LP providers and treasury.

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Well, after some research I can answer my question.

I was indeed right, treasury fee is 1/6 (16.6%) of the total fee.

uniswap doc

Precisely, the code for this formula is in the core repository:

code

unction _mintFee(uint112 _reserve0, uint112 _reserve1) private returns (bool feeOn) {
        address feeTo = IShuttleFactory(factory).feeTo();
        feeOn = feeTo != address(0);
        uint _kLast = kLast; // gas savings
        if (feeOn) {
            if (_kLast != 0) {
                uint rootK = Math.sqrt(uint(_reserve0).mul(_reserve1));
                uint rootKLast = Math.sqrt(_kLast);
                if (rootK > rootKLast) {
                    uint numerator = totalSupply.mul(rootK.sub(rootKLast));
                    uint denominator = rootK.mul(5).add(rootKLast);
                    uint liquidity = numerator / denominator;
                    if (liquidity > 0) _mint(feeTo, liquidity);
                }
            }
        } else if (_kLast != 0) {
            kLast = 0;
        }
    }

And as I mentioned, the total fee is declared in the frontend code as a basis point (0.3%):

code

const BASE_FEE = new Percent(JSBI.BigInt(30), JSBI.BigInt(10000)) 

So, in the case of Uniswap:

0.3$ is a total fee, this multiplied by 1/6 is 0.05, their treasury fee. If this fee isn't on, LP providers are getting full 0.3%, so turning on the fee won't change anything for traders, they will still pay the same amount but in that case, LP providers will get only 0.25%

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  • I'm marking this answer as a solution, but I'm not giving any guarantees that I'm right, Working on smart contracts that should manage someone's money is very important and please DYOR carefully! – Kaneda May 19 at 11:49

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