Pact Swap
Understanding PACT SWAPFee Structure

Fee Structure

Retail perspective on the fees paid on each swap

PACT SWAP is a fully on-chain protocol, with no centralised servers or hidden logic. The fee structure is simple and transparent, entirely implemented as smart contract logic.

PACT SWAP Fee Structure

Simplified PACT SWAP Fee Structure

The fees a user pays on each swap can easily be broken down, no hidden costs:

Swap Cost=Fprotocol+Ccollateral+Fgas+Mprofitwhere:Fprotocol:Protocol fee (0.1%)Ccollateral:Cost of replenishing collateralFgas:Gas fees for L1 transactionsMprofit:Profit margin for LP\begin{align*} \text{Swap Cost} &= F_{\text{protocol}} + C_{\text{collateral}} + F_{\text{gas}} + M_{\text{profit}} \\ \\ \text{where:} \\ F_{\text{protocol}}&: \text{Protocol fee (0.1\%)} \\ C_{\text{collateral}}&: \text{Cost of replenishing collateral} \\ F_{\text{gas}}&: \text{Gas fees for L1 transactions} \\ M_{\text{profit}}&: \text{Profit margin for LP} \\ \end{align*}

Step by Step

Collateral Deposit

The counterparty, in our case a liquidity provider (LP), starts by sending $200 worth of CWEB to the Collateral Smart Contract. This represents 2x the value of the $100 trade. After the collateral is deposited, the LP creates an order in the order book. The 2x deposit is now locked in, and the order is available for matching by other participants.

User Swap Initiation

User sends 100 USDT on Ethereum to the L1 address provided by the order matching system. User pays L1 transaction fee on Ethereum chain.

LP Swap Fulfillment

The counterparty MUST fulfill the obligation by sending 99.75 USDT (deducted the swap cost from the swap amount) on BNB Chain to the user's wallet, or otherwise lose the locked in collateral (twice the amount). LP must cover the L1 transaction fee on BNB Chain, while it is deducted from the swap amount.

Swap Costs Breakdown

  • Protocol fee:
    • 0.1% of the swap amount (0.1% of $100 = $0.10)
  • Collateral top-up fees:
    • $0.01
  • Gas fees:
    • L1 transaction fee (in this case, BNB Chain, ~ $0.04)
  • Margin:
    • Profit margin for LP ($0.10)

Fee pool aggregation

The smart contract deducts $0.10 CWEB (10 bps based on the $100 swap amount) from the LP’s collateral and sends it to the Fee Pool Smart Contract. This is how the protocol continuously accumulates fees in CWEB.

Fee pool

The fee pool cannot be accessed by anyone and is continuously accumulating fees in CWEB. Token holders can burn $PACTSWAP tokens to access their equivalent share of the fee pool.

Collateral Return

After fulfilling the obligation, the counterparty receives their $199.9 worth of CWEB collateral back, including the deducted small amount of CWEB that was aggregated into the fee pool. The collateral is returned to the LP's wallet.

This structure ensures:

  • The user is fully protected by over-collateralization
  • The protocol captures fees directly on-chain
  • LPs have clear economics: collateral, gas costs, fee pool contribution, and profit margin

PACT SWAP delivers trustless, efficient, and transparent cross-chain swaps — with every participant properly incentivized and protected.

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