Temporary Fee

After a price move, the backrun side pays a temporary fee for one block. The hook sets it on the first swap of the block. Every swap on the backrun side pays it until the end of that block.

Restore and capture

restore = restoreFraction × (newLeanPerm - oldLeanPerm)   if priceImpact >= restoreThreshold, else 0
capture = backrunCaptureFraction × priceImpact            if priceImpact >= backrunThreshold, else 0
temporary fee = restore + capture

• Restore adds back the amount the backrun side's permanent fee just dropped. With a restore fraction of 100% and a threshold of 0, the full drop is added back on every move. With a lower fraction or a higher threshold, a price move can lower the backrun side's starting fee for that block.
• Capture charges the backrun side a share of the price move. It applies only when the move is at least the backrun threshold. LPs receive this share when someone backruns a large trade.

The two thresholds are set separately. If both are 10 bp, moves below 10 bp have no temporary fee and larger moves get both parts.

Starting fee for the block

If the price did not move since the last block open, the temporary fee is zero and ask plus bid equals the resting spread.

Duration

The temporary fee lasts until the next block that contains a swap. That block's first swap recomputes it from the price impact since the previous block open. If the price has not moved since then, the new temporary fee is zero.

Where to Go Next

• Mid-Block Fees
• VolatilePair Security