DeFi · 90 / 127 · 1 min
The fee switch
A protocol can turn a fee on later. The vote, or the admin, decides who receives it.
Today's fee is today's fee. A switch means someone can change who is paid.
A worked case
Liquidity providers earn the fee and ignore a governance switch. A vote turns part of the fee toward token holders. The providers' yield falls. The vote was in the design the whole time.
Off, then on
A pool can run with no fee to token holders, and a switch that can change that. The switch is a rule waiting in the design.
Who is paid
Liquidity providers, token holders, or a treasury. Those are different people. Turning the switch on moves the fee from one of them to another.
Uniswap's fee was a vote waiting
Uniswap charges a fee on swaps and, in its common pools, paid that fee to liquidity providers. The governance design also allowed a switch that could direct part of a fee elsewhere. Whether the switch is on is a fact you can look up. That it can exist is the lesson.
A yield you saw on a Tuesday is a Tuesday. If a vote or an admin can redirect the fee, the payer of your yield can change without the pool closing.
Read it yourself
These links are the record. They are not a recommendation, and they are not instructions. A news story or a court paper can still be wrong about a detail. The check does not change because a famous name is in the story.
Apply the check
Open a question. The line is about this topic. It is not a verdict that anything is safe.
Whoever the switch pays after it flips.
Whoever can pass the vote, or the admin if one exists.
The switch.
Check yourself
Write it in your own words. The course's answer opens after that. Nothing is sent.
After this you can find out whether a fee switch exists, and who it pays.