Overview
The fee calculation utilities help you compute the required fee amount for orders. All values are in microunits where 1,000,000 = $1.00.
The fee formula is: fee = feeBase × quantity × price × (1 - price)
calculateFee
Calculates the required fee amount in microunits for a given order.
import { calculateFee } from '@alpha-arcade/sdk';
const fee = calculateFee(quantity, price, feeBase);
Parameters
Order quantity in microunits (e.g., 1,000,000 for 1 share)
Order price in microunits (e.g., 500,000 for $0.50)
Fee base in microunits (e.g., 70,000 for 7%)
Returns
Fee amount in microunits (ceiling)
Examples
Basic fee calculation
// 1 share at $0.50 with 7% fee base
const fee = calculateFee(1_000_000, 500_000, 70_000);
console.log(fee); // => 17500 (approximately $0.0175)
Different price points
// At $0.30 (lower probability)
const fee1 = calculateFee(1_000_000, 300_000, 70_000);
console.log(fee1); // => 14700
// At $0.70 (higher probability)
const fee2 = calculateFee(1_000_000, 700_000, 70_000);
console.log(fee2); // => 14700
// At $0.50 (even odds)
const fee3 = calculateFee(1_000_000, 500_000, 70_000);
console.log(fee3); // => 17500 (highest fee at 50/50)
Multiple shares
// 10 shares at $0.60 with 7% fee base
const fee = calculateFee(10_000_000, 600_000, 70_000);
console.log(fee); // => 168000 (approximately $0.168)
Different fee bases
// 1 share at $0.50 with different fee bases
const fee5 = calculateFee(1_000_000, 500_000, 50_000); // 5% fee
console.log(fee5); // => 12500
const fee10 = calculateFee(1_000_000, 500_000, 100_000); // 10% fee
console.log(fee10); // => 25000
calculateFeeFromTotal
Calculates the fee when given a total amount that includes the fee. This is useful when you know the total amount you want to spend (including fees) and need to determine how much of that is the fee.
import { calculateFeeFromTotal } from '@alpha-arcade/sdk';
const fee = calculateFeeFromTotal(totalAmount, price, feeBase);
Parameters
Total amount in microunits including fee
Price in microunits (e.g., 500,000 for $0.50)
Fee base in microunits (e.g., 70,000 for 7%)
Returns
Fee amount in microunits (ceiling)
Examples
Calculate fee from total
// I want to spend $1.00 total at $0.50 with 7% fee base
const fee = calculateFeeFromTotal(1_000_000, 500_000, 70_000);
console.log(fee); // => 17241 (approximately $0.017241)
// The actual quantity purchased would be:
const quantity = 1_000_000 - fee;
console.log(quantity); // => 982759 microunits
Reverse calculation
// If you have a budget of $5.00 and want to know the fee
const totalBudget = 5_000_000;
const price = 600_000; // $0.60
const feeBase = 70_000; // 7%
const fee = calculateFeeFromTotal(totalBudget, price, feeBase);
console.log(fee); // Fee amount
const purchaseAmount = totalBudget - fee;
console.log(purchaseAmount); // Amount that goes to purchase
- Scale with quantity: Larger orders pay proportionally more fees
- Scale with risk: The
price × (1 - price) component creates a parabolic curve that peaks at 50% probability
- Minimize fees at extremes: Orders at very high or very low probabilities (near certainty) pay less fees
Fee curve visualization
For a 1-share order with 7% fee base:
- At 0.10:fee≈0.0063 (0.63%)
- At 0.30:fee≈0.0147 (1.47%)
- At 0.50:fee≈0.0175 (1.75%) — maximum
- At 0.70:fee≈0.0147 (1.47%)
- At 0.90:fee≈0.0063 (0.63%)
This encourages liquidity at all price levels while charging the most for trades at even odds.