> ## Documentation Index
> Fetch the complete documentation index at: https://docs.geode.ag/llms.txt
> Use this file to discover all available pages before exploring further.
# Economics
> Settlement fees, the 3-way fee split, surplus management, settler rewards, gas reimbursement, and wash trade resistance.
## Overview
Geode's economic model ensures three things:
1. **Settlers are incentivized** to settle batches promptly
2. **Wash trading is unprofitable** — batches can't extract more than they contribute
3. **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| \~1/3 | 3334 | Curve ETH reserve | **Permanently increases the floor price** — this ETH can never be withdrawn |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:
A batch with only buys (or only sells) still produces fees. There's no dependency on opposite-side intents existing.
Each batch's fees come from that batch's participants — not from a shared pool that could be drained.
Output distribution is already net of fees. No cross-side deduction needed — each buyer/seller gets their full pro-rata share.
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:
```solidity theme={null}
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:
1. **Gas reimbursement** — capped, per-batch, gas-based (for any pool)
2. **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**:
`washAmount × settlementFeeBps / 10,000` from currency0 input
`washAmount × settlementFeeBps / 10,000` from currency1 input
The washer loses fees on both sides. They receive back less than deposited. The net cost is always negative.
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.