Block Rewards vs Swap Fees

    Analyzing The Profits

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    THORchain has many fee mechanisms to enable value accrual within the ecosystem however they can be broken down into two main parts. These are block rewards and swap fees. Block rewards are earned at the network level while swap fees are earned from swaps.

    In this publication, we shall look at the share of block rewards against swap fees and how that has changed over time. We will also look at what the distribution is like within pools.

    The first chart we shall look at is the total amount of block rewards vs. swap fees over time as presented below. Generally, we can see that swap fee, also known as liquidity fees has been the larger share usually ranging from 50-70% and was even at 100% for a brief period in the begining.

    Next, we'll look at how these two types of fees are distributed within pools. Just by observing the chart below, we can see that for most pools swap fees take about 60% of the share very much supporting the pattern above.

    With this analysis, we can conclude that swap fee are really important in the THORchain ecosystem as it makes up the larger share of the total fees. With the introduction of impermanent loss (IL) protection, THORchain does a good job to secure the bread of THORchain stakeholders. Long live THORchain!