Example 2: 1 Day to Maturity

How coefficient and time to maturity affect fees

Scenario

• Trade Date: October 24th

• Contract Maturity: October 25th (1 day to maturity)

• Notional Value: $10,000

• LP Fee Percentage: 0.22%

• Protocol Fee Percentage: 0.09%

• Assumed Price Impact: 0.10%

Time to Maturity

• Seconds to Maturity: Seconds to Maturity = 1 day × 24 hours/day × 60 minutes/hour × 60 seconds/minute Seconds to Maturity = 86,400 seconds

• Seconds in a Year: Seconds in a Year = 365 days × 24 hours/day × 60 minutes/hour × 60 seconds/minute Seconds in a Year = 31,536,000 seconds

• Coefficient: Coefficient = Seconds to Maturity ÷ Seconds in a Year Coefficient = 86,400 ÷ 31,536,000 Coefficient ≈ 0.00274

Calculations

We're assuming same price impact as in Example 1, so LP Fee Percentage is 0.22%

1. Combined Fee Percentage: Combined Fee Percentage = LP Fee Percentage + Protocol Fee Percentage Combined Fee Percentage = 0.22% + 0.09% Combined Fee Percentage = 0.31% or 0.0031 in decimal form

2. Total Fee: Total Fee = Notional Value × Combined Fee Percentage × Coefficient Total Fee = $10,000 × 0.0031 × 0.00274 Total Fee = $0.0849

Interpretation

• The total fee for opening a position with a notional value of $10,000 and 1 day to maturity is approximately $0.08.

• This demonstrates how the fee decreases as the time to maturity shortens. In this specific case, LP and Protocol fees are almost 32 times cheaper closer to maturity.

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Conclusions

• Fees on Rho Trading are dynamic and influenced by LP fees, protocol fees, time to maturity, and market impact.

• The coefficient adjusts the fees based on how close the contract is to expiring.

• Understanding these components helps traders estimate costs and make informed decisions.