> For the complete documentation index, see [llms.txt](https://docs.nectarliquid.com/llms.txt). Markdown versions of documentation pages are available by appending `.md` to page URLs; this page is available as [Markdown](https://docs.nectarliquid.com/builders/fee-structure-and-governance.md).

# Builder Economics & Governance

Nectar Liquid allows builders to set custom transaction fees on the trading volume they route into the protocol. This page explains how builder fees are structured, calculated, and governed.

***

### Basis Points (bps) Economics

Builder fees are denominated in **basis points (bps)**, where:

$$1\text{ bps} = 0.01% = 0.0001$$

Builder fees are calculated directly on the **total notional position size** of an order (collateral multiplied by leverage), not on the collateral alone:

$$\text{Builder Fee (USD)} = \text{Position Notional (USD)} \times \left(\frac{\text{Fee Rate (bps)}}{10{,}000}\right)$$

#### Example Fee Calculations

The table below illustrates builder revenue across different order sizes and fee tiers:

| Position Notional (USD) | 1 bps (0.01%) | 2 bps (0.02%) | 3 bps (0.03%) | 5 bps (0.05% Max Cap) |
| ----------------------- | ------------- | ------------- | ------------- | --------------------- |
| **$1,000**              | $0.10         | $0.20         | $0.30         | $0.50                 |
| **$5,000**              | $0.50         | $1.00         | $1.50         | $2.50                 |
| **$10,000**             | $1.00         | $2.00         | $3.00         | $5.00                 |
| **$50,000**             | $5.00         | $10.00        | $15.00        | $25.00                |
| **$100,000**            | $10.00        | $20.00        | $30.00        | $50.00                |

Builder fees are charged at order execution time alongside standard protocol open/close position fees.

***

### Protocol Fee Cap

To safeguard traders from excessive extraction and preserve competitive market execution across Asset Chain, the protocol enforces a hard system ceiling:

* **Maximum Builder Fee Cap**: **5 basis points (0.05%)** (`feeCapBps = 5`).
* Neither builders nor automated endpoints can configure or charge a fee exceeding 5 bps.
* Any fee request or contract call requesting greater than 5 bps will be rejected immediately by API validation and smart contract guardrails.

***

### Default Starting Rate

When a builder completes self-service registration:

* The initial fee policy is set to **0 bps**.
* This enables builders to test end-to-end integration, verify trade attribution, and benchmark SDK performance without adding fees for end-users.

***

### Fee Rate Change Requests & Governance

To raise your fee rate (for example, from 0 bps to 3 bps or up to the 5 bps maximum), you must submit a **Fee Rate Request**:

1. **Submission**: Builders submit a request through the builder dashboard or programmatically via `POST /v1/builders/me/fee-rate-requests`.
2. **Review**: The protocol governance team reviews the integration, confirming:
   * The builder's active frontend, app, or bot deployment.
   * Clear fee disclosure to end-users within the builder's interface.
   * Organic user base and verified payout wallet address.
3. **Approval & Activation**: Once approved, the new fee policy is activated on-chain and in backend accounting.

```
   [ Builder ]
       |
       |  POST /v1/builders/me/fee-rate-requests { feeRateBps: 3 }
       v
   [ Pending Policy Created ]
       |
       |  Protocol Governance Review
       v
   +---------------+---------------+
   |                               |
   v                               v
[ Approved ]                  [ Rejected ]
New fee policy activates      Status returns to active policy
```

***

### Deterministic Execution Guarantee

Fee rate modifications adhere to strict deterministic guarantees:

* **In-Flight Order Protection**: Changing a builder fee rate applies only to new orders created *after* the policy change is activated.
* **Smart Contract Immutability**: Orders currently pending in the `OrderVault` await keeper execution with their original agreed-upon parameters. Keepers execute the exact fee encoded into the order at the time of user signature.
* **Trader Transparency**: Traders are protected from unexpected fee fluctuations during high-volatility execution windows.


---

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