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description: Fees associated with the DEX
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# Protocol Fees

## Overview

The **protocol fees** collected by **Mondrian Swap** ensure the **sustainability, growth, and long-term success** of the decentralized exchange. These fees contribute to **liquidity incentives, staking rewards, and protocol development**, reinforcing Mondrian Swap’s position as a **capital-efficient and community-driven DEX**.

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## Sources of Protocol Fees

### **1. Trade Fees**

The **primary revenue source** for Mondrian Swap comes from **trading fees** paid by users when executing swaps. These fees are distributed to **Liquidity Providers (LPs)** in the **input token**, compensating them for **providing liquidity** and ensuring smooth trade execution.

### **2. Protocol Fees**

A **portion of the trading fees** collected, **currently 50%**, is allocated to **protocol sustainability and ecosystem growth**. This structured fee distribution model aligns **incentives between liquidity providers, stakers, and developers,** as described below:

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## Protocol Fee Distribution

Mondrian Swap’s **fee structure** ensures a **balanced allocation** of protocol earnings:

📌 **60%** → **Reinvested into Liquidity Provision**\
✔ Used to **boost liquidity depth** on Mondrian Swap.\
✔ Enhances **capital efficiency** and trading experience.\
✔ Supports **higher yields for LPs**, attracting more liquidity.

📌 **30%** → **Distributed to veMondrian Stakers** (Upon Release)\
✔ Rewards long-term **Mondrian Swap governance participants**.\
✔ Encourages **active protocol engagement** through staking incentives.\
✔ Until **veMondrian is launched**, these funds will be **stored for future distribution**.

📌 **10%** → **Protocol Development**\
✔ Funds **ongoing development**, ensuring **continuous innovation**.\
✔ Supports **research, audits, and ecosystem growth initiatives**.\
✔ Helps build **new features, integrations, and security improvements**.

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## Community Governance & Fee Adjustments

Mondrian Swap is committed to **decentralized governance**, meaning that in the future:

* **Protocol fees and their distribution** will be **decided by governance proposals**.
* **veMondrian stakers** will have voting rights to **adjust fee structures** based on community consensus.
* The system ensures **transparent fund allocation**, driven by **user engagement and network growth**.
