# Deposit Fees

Last updated

Last updated

A user can earn arbitrage profit by performing a swap, deposit followed by a reverse swap on a token with liquidity ratio > 1. Thus, the deposit fees is only charged for tokens where the liquidity ratio > 1.

The arbitrage fee is given by:

$\text{Deposit fees} = (L+d) \left(f(r_2)-f\left(\frac{r_{\text{max}}L+d}{L+d}\right)\right) + L (f(r_{\text{max}})-f(r_1))$

βHere,

*L = Liability*

*d = Deposit amount*

*r_1 = Liquidity ratio before deposit*

*r_2 = Liquidity ratio after deposit*

*r_max = Maximum liquidity ratio of the token*

r_max is a weighted average of the maximum liquidity ratio observed over a period of time. It is calculated such that

$r_{max} \geq r_1$

always holds true.

Deposit fees increases as the difference between r_max and r_1 increases, as this denotes a possible arbitrage opportunity. When r_max = r_1, deposit fees = 0