Economics

Overview

Geode’s economic model ensures three things:

Settlers are incentivized to settle batches promptly
Wash trading is unprofitable — batches can’t extract more than they contribute
The protocol captures value from direct swap activity while permanently strengthening curve markets

Core invariant: A batch cannot withdraw more settlement reward than that batch economically contributed, except for a tightly capped gas reimbursement.

Fee Sources

Fee	Rate	Source	Beneficiary
Settlement fee	0.1% (10 bps)	Deducted from each filled intent’s input	Settler
Direct swap fee (curve pools)	0.3% (30 bps)	Charged on direct swaps via `beforeSwap`	1/3 curve reserve, 1/3 treasury, 1/3 surplus
Direct swap fee (standard pools)	Configurable	Charged on non-intent swaps via `beforeSwap`	~1/3 treasury, ~2/3 surplus
Gas reimbursement	Gas-based	Drawn from surplus, capped per batch	Settler

The 3-Way Fee Split (Curve Pools)

Direct swaps on curve pools charge a 0.3% fee that is split three ways:

Share	BPS	Destination	Purpose
~1/3	3334	Curve ETH reserve	Permanently increases the floor price — this ETH can never be withdrawn
~1/3	3333	Protocol treasury	Protocol revenue
~1/3	~3333	Surplus pool	Funds settler gas reimbursement

The reserve fee is the most interesting piece — it means every direct swap permanently ratchets the curve’s floor price upward. The more trading activity a token has, the higher its floor.

For standard pools (non-curve), there is no reserve fee. The fee is split ~1/3 to treasury and ~2/3 to surplus.

Settlement Fee

Every filled intent pays a settlement fee from its own input before that input routes to internal matching, the curve, or the AMM:

gross input = intent.amountIn
settlement fee = gross input × settlementFeeBps / 10,000
net input = gross input - settlement fee

Buy intents: fee is denominated in currency0 (e.g., WETH)
Sell intents: fee is denominated in currency1 (e.g., the token)
Only net input participates in matching, curve, or AMM routing
The fee amount remains in the PoolManager as unrouted balance

The settler claims these fees via poolManager.take() at the end of settlement.

Why Input-Side?

Deducting fees from the input (not the output) has important properties:

One-Sided Batches Work

A batch with only buys (or only sells) still produces fees. There’s no dependency on opposite-side intents existing.

Self-Funding

Each batch’s fees come from that batch’s participants — not from a shared pool that could be drained.

Clean Distribution

Output distribution is already net of fees. No cross-side deduction needed — each buyer/seller gets their full pro-rata share.

Curve Integrity

In curve mode, curve reserves receive net input. Fees never inflate the Geocurve’s price or reserves.

Settler Reward

The total reward a settler earns from a batch:

settlerReward = batchSettlementFees + min(surplusAvailable, gasReimbursement)

Component 1: Batch Settlement Fees

buyFees  = totalFilledBuyInput  × settlementFeeBps / 10,000   (in currency0)
sellFees = totalFilledSellInput × settlementFeeBps / 10,000   (in currency1)

The settler always receives these in full — they come from the intent owners’ own deposits.

Component 2: Gas Reimbursement

gasUsed = gasStart - gasleft()
gasCost = gasUsed × tx.gasprice
gasReimbursement = min(
    gasCost × gasReimbursementMultiplier / 100,
    maxGasReimbursement
)

Gas reimbursement is drawn from the pool’s accumulated surplus. Key properties:

Capped: never exceeds maxGasReimbursement per batch (default: 0.01 ETH)
Gas-based: scales with actual gas consumed, NOT with matched volume
Surplus-funded: draws from surplusCurrency0 then surplusCurrency1
Best-effort: if surplus is insufficient, the settler receives less

This serves as a liveness backstop — settlement remains viable even when fees alone don’t cover gas costs.

SettlerPaid Event

Every settler payment emits an on-chain audit trail:

event SettlerPaid(
    PoolId indexed poolId,
    address indexed settler,
    uint256 settlementFee0,      // from buyer input (currency0)
    uint256 settlementFee1,      // from seller input (currency1)
    uint256 gasReimbursement0,   // from surplusCurrency0
    uint256 gasReimbursement1    // from surplusCurrency1
);

Off-chain monitoring can verify:

Settlement fees scale linearly with volume (input-funded)
Gas reimbursement is constant across volume tiers (gas-based, capped)

Surplus Management

Accumulation

Surplus comes from direct swap fees — the fee charged by the beforeSwap hook on non-intent swappers:

Curve pools: 1/3 of the 0.3% fee goes to surplus (~0.1% per swap)
Standard pools: ~2/3 of the fee goes to surplus

Surplus is held as ERC20 balance on the hook contract itself.

Draw-Down

Surplus is drawn for two purposes only:

Gas reimbursement — capped, per-batch, gas-based (for any pool)
Deployer royalty — curve pools only, sized from matched volume

Surplus is never used to fund settlement fees. Settlement fees are self-funded by each batch’s participants.

Wash Trade Resistance

The Attack

A wash trader submits matched buy and sell intents for the same amount. In a naive surplus-funded model, the settler reward would scale with matched volume, allowing surplus extraction.

The Defense

Under Geode’s per-intent fee model, wash trading is strictly net-negative:

Buy Side Pays

washAmount × settlementFeeBps / 10,000 from currency0 input

Sell Side Pays

washAmount × settlementFeeBps / 10,000 from currency1 input

Net P&L

The washer loses fees on both sides. They receive back less than deposited. The net cost is always negative.

Surplus Exposure Limited

Gas reimbursement is capped at maxGasReimbursement (0.01 ETH) regardless of volume. The washer can’t inflate the gas draw by adding more volume.

Worked Example

At default parameters (0.1% fee, 0.01 ETH gas cap):

Wash Volume	Fee Cost (Both Sides)	Max Surplus Extracted	Net P&L
1 ETH	0.002 ETH	0.01 ETH	+0.008 ETH
5 ETH	0.01 ETH	0.01 ETH	0 ETH
10 ETH	0.02 ETH	0.01 ETH	-0.01 ETH
50 ETH	0.10 ETH	0.01 ETH	-0.09 ETH

The break-even point is ~5 ETH. Above that, every additional ETH of wash volume costs the attacker more. The gas draw remains constant.

Gas Cost Profile

Settlement gas scales approximately linearly with batch size after a fixed overhead:

Batch Size (N)	Total Gas	Per-Intent Gas
1	~397K	~397K
5	~556K	~111K
10	~1.06M	~106K
25	~2.58M	~103K
50	~5.16M	~103K

The per-intent marginal cost converges to ~103K gas. The fixed overhead (~290K) covers batch validation, clearing price computation, and settler payment.

Default Parameters

Parameter	Value	Description
`settlementFeeBps`	10 (0.1%)	Per-intent fee on input amount
`directSwapFeeBps`	30 (0.3%) for curve pools	Fee on direct swaps, split 3 ways
`maxGasReimbursement`	0.01 ETH	Hard cap on surplus draw per batch
`gasReimbursementMultiplier`	150 (1.5×)	Gas cost multiplier (covers gas + margin)
`batchInterval`	1 block	Minimum blocks between settlements
`maxBatchSize`	128	Maximum intents per side per batch
`PROTOCOL_FEE_SHARE_BPS`	3333 (~1/3)	Protocol’s share of direct swap fees
`CURVE_RESERVE_FEE_SHARE_BPS`	3334 (~1/3)	Curve reserve’s share (permanent floor ratchet)

Security Properties

Property	Mechanism
Fees come from intent owner’s own input	Input-side deduction before routing
One-sided batches pay fees	No dependency on opposite-side output
Wash trading is net-negative	Both sides pay fees; surplus draw is capped
Surplus cannot be drained by volume	Gas reimbursement is gas-based, not volume-based
Curve reserves reflect net economics	Net input after fee deduction
Floor price only goes up	Reserve fee portion permanently increases ETH reserve
Settler competition prevents manipulation	First valid batch wins; omitted intents lose to complete batches

Verified: All economic properties are tested in SettlementEconomics.t.sol and CurveDirectSwap.t.sol — including adversarial wash trade scenarios, gas cap enforcement, fee split verification, and curve state invariants.

Getting Started

Protocol

Resources

Overview

Fee Sources

The 3-Way Fee Split (Curve Pools)

Settlement Fee

Why Input-Side?

One-Sided Batches Work

Self-Funding

Clean Distribution

Curve Integrity

Settler Reward

Component 1: Batch Settlement Fees

Component 2: Gas Reimbursement

SettlerPaid Event

Surplus Management

Accumulation

Draw-Down

Wash Trade Resistance

The Attack

The Defense

Worked Example

Gas Cost Profile

Default Parameters

Security Properties

​Overview

​Fee Sources

​The 3-Way Fee Split (Curve Pools)

​Settlement Fee

​Why Input-Side?

One-Sided Batches Work

Self-Funding

Clean Distribution

Curve Integrity

​Settler Reward

​Component 1: Batch Settlement Fees

​Component 2: Gas Reimbursement

​SettlerPaid Event

​Surplus Management

​Accumulation

​Draw-Down

​Wash Trade Resistance

​The Attack

​The Defense

​Worked Example

​Gas Cost Profile

​Default Parameters

​Security Properties

Overview

Fee Sources

The 3-Way Fee Split (Curve Pools)

Settlement Fee

Why Input-Side?

Settler Reward

Component 1: Batch Settlement Fees

Component 2: Gas Reimbursement

SettlerPaid Event

Surplus Management

Accumulation

Draw-Down

Wash Trade Resistance

The Attack

The Defense

Worked Example

Gas Cost Profile

Default Parameters

Security Properties