Costs & Fees

Understanding Trading Costs and Optimization Strategies

Understanding the complete cost structure of trading on MegaTAO is essential for maximizing your profitability and making informed trading decisions.

Fee Structure

MegaTAO uses a transparent fee structure designed to be competitive while maintaining protocol sustainability:

Trading Fees: 0.5% charged when opening and closing positions. This covers the cost of executing trades and maintaining the protocol vault system that provides orderbook matching and counterparty services.

Funding Costs: Variable rates charged every 8 hours (00:00, 08:00, 16:00 UTC) to maintain price alignment between perpetual futures and spot prices.

Liquidation Fees: 5% penalty charged only if your position is liquidated. This fee helps cover the cost of forced position closures and protects the protocol.

Gas Costs: Variable costs for blockchain transactions. These depend on network congestion and transaction complexity.

📊 Cost Impact Analysis

The total cost impact varies significantly based on position size and trading frequency:

Small Positions (<$1,000): Total costs can range from 2.5-5.5% due to fixed trading fees having a larger relative impact.

Medium Positions ($1,000-$10,000): Total costs typically range from 1-2.5% as fixed fees become a smaller percentage of the position size.

Large Positions (>$10,000): Total costs are typically less than 1% as the impact of fixed fees becomes minimal.

Optimization Strategies

Maximize your profitability by implementing these cost optimization strategies:

Reduce Trade Frequency: Each trade incurs a 0.5% fee, so reducing unnecessary trading can significantly lower your overall costs.

Monitor Funding Rates: Understanding funding rate trends can help you time your entries and exits to minimize funding costs.

Maintain Healthy Margins: Avoiding liquidation prevents the 5% penalty fee and protects your capital.

Batch Operations: Combining multiple operations into single transactions can reduce gas costs and improve efficiency.