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Fee Distribution

Understanding how fees are distributed is essential for both token creators and liquidity providers on the Paws platform. This section explains how trading fees are handled in different pool types (DBC and DAMM v2), and how they are split between the Paws platform and the user who creates the token.

Overview​

Whenever a swap or trade occurs in a liquidity pool, a fee is charged. This fee is distributed between:

  • The Paws platform (as a protocol/platform fee)
  • The token creator (as an incentive for launching and supporting the token)

The exact distribution depends on the pool type and the current configuration.

DBC Pools (Meteora Dynamic Bonding Curve)​

  • Fee Structure:
    DBC pools charge a trading fee on every swap. The total fee is split between the Paws platform and the token creator.
  • Distribution Example:
    • Platform Fee: A percentage of each swap fee is sent to the Paws platform’s fee collection address.
    • Creator Fee: The remaining portion is sent to the wallet of the user who created the token/pool.
  • How it works:
    • The backend configures the fee split when creating the pool.
    • Fees are distributed automatically on-chain by the DBC smart contract logic.
  • Typical Split:
    • Example: 80% to the token creator, 20% to Paws (actual values may vary and are configurable).

DAMM v2 Pools​

  • Fee Structure:
    DAMM v2 pools also charge a trading fee on every swap, with a similar distribution mechanism.
  • Distribution Example:
    • Platform Fee: A portion of the fee is routed to the Paws platform.
    • Creator Fee: The rest is sent to the token creator’s designated address.
  • How it works:
    • The fee split is set at pool creation and enforced by the DAMM v2 protocol.
    • All distributions are transparent and verifiable on-chain.
  • Typical Split:
    • Example: 80% to the token creator, 20% to Paws (configurable per pool).

How Fees Are Collected and Distributed​

  1. Swap Occurs:
    A user swaps tokens in a pool (DBC or DAMM v2).
  2. Fee Charged:
    The protocol charges a fee (we charge 2% of the trade amount).
  3. Fee Split:
    The fee is automatically split between the Paws platform and the token creator according to the configured percentages (50/50 on Paws).
  4. On-Chain Distribution:
    • The platform’s share is sent to the Paws fee collection address.
    • The creator’s share can be claimed on the token page.
  5. Transparency:
    All fee transactions are recorded on the Solana blockchain and can be audited by anyone.

Notes​

  • Configurable Splits:
    The exact fee percentages can be adjusted by the platform and may vary between pools.
  • Automatic Handling:
    All fee logic is handled by the backend and enforced by the underlying smart contracts (DBC or DAMM v2).
  • Upgrades and Migrations:
    If a pool is migrated (e.g., from DBC to DAMM v2), the fee distribution logic continues to apply according to the new pool’s configuration.

Summary​

Fee distribution on Paws is designed to reward both the platform and token creators, ensuring sustainable growth and incentivizing new projects. All distributions are handled transparently and securely on-chain, with clear records for every transaction.

If you have questions about specific fee splits or want to see the current configuration for your pool, please contact support or check the on-chain pool configuration.