Fees

Liquidity provider fees

There is a 0.3% fee on V2 and a dynamic fee for V3 and V4 for swapping tokens. This fee is split by liquidity providers proportional to their contribution to liquidity reserves and the protocol.

Swapping fees are immediately deposited into liquidity reserves for V2. This increases the value of liquidity tokens, functioning as a payout to all liquidity providers proportional to their share of the pool. Fees are collected by burning liquidity tokens to remove a proportional share of the underlying reserves.

Since fees are added to liquidity pools, the invariant increases at the end of every trade. Within a single transaction, the invariant represents token0_pool / token1_pool at the end of the previous transaction. But can be manually claimed on V3 and V4

There are many community-developed tools to determine returns. You can also read more in the docs about how to think about LP returns.

Protocol Fees

At the moment, there is a 0.05% of the 0.3% protocol fee on V2 and 15% of the dynamic fee on V3/V4.