Skip to content
Get exclusive early access to the future of options trading on Arbitrum! Join Discord →

Understanding Valorem Protocol Fees

Embarking on the Valorem platform journey? Ensure you’re armed with insights on its fee structure. This guide walks through Valorem’s unique maker-taker fee model for trade relays and offers a clear understanding of clearing and settlement costs. With illustrative examples centered around real trades and options, we’ll simplify the arithmetic behind each transaction fee, empowering you to navigate the Valorem ecosystem efficiently and confidently.

Valorem has a maker-taker fee model for relaying trades, meaning actions which provide liquidity may have different fees assessed than actions that take liquidity. Likewise for clearing and settlement — different fees may be assessed for option writers and option holders.

Trade Relay Fees

Taker fees: 1.25% of option premium

option_premium * quantity * 0.0125

Maker fees: None currently

Clearing and Settlement Fees

Write fee: 0.15% of optional notional (assessed in the underlying asset)

option_notional * quantity * 0.0015

Exercise fee: 0.15% of option notional (assessed in the exercise asset)

option_notional * quantity * 0.0015

Example Scenario

  • Symbol: ETH-8SEP23-1650-C
  • Type: Call
  • Underlying Asset: WETH
  • Exercise Asset: USDC
  • Expiry: 2023-09-08T08:00:00+0000
  • Strike: $1,650
  • Exercise Style: American
  • Quantity: 2
  • Premium: $5

Alice (taker) requests a quote for 2 ETH-8SEP23-1650-C options. Bob (maker) responds with a quote of 10 USDC, and Alice executes the order. The system transfers 2 Valorem options from Bob to Alice, 9.875 USDC from Alice to Bob, and 0.125 USDC from Alice to Valorem ‘feeTo’ address.

5 USDC * 2 options * 1.0125 (trade relay fee)

When Bob initially wrote the 2 options, 2.003 WETH were transferred from Bob to Valorem Clear (a write fee assessed of 0.003 WETH).

2 WETH * 2 options * 1.0015 (write fee)

If Alice were to exercise the 2 options, 3304.95 USDC would be transferred from Alice to Valorem Clear (an exercise fee assessed of 4.95 USDC), and 2 WETH would be transferred from Valorem Clear to Alice.

1,650 USDC * 2 options * 1.0015 (exercise fee)