Fees are charged by the protocol when actions that users take have a net negative effect on the protocol. This is done to not just encourage users to perform the right kind of activities but also generate revenue for all staking pools and for ARTHX holders.
The ARTH platform charges two kinds of fees:
All fees generated by the platform are redirected as revenue for ARTHX holders and distributed via the ARTHX staking pools.
Trading fees are charged in the underlying collateral token and typically a small percentage from 0.1-0.2%.
The trading fee is charged when a user:
Recollateralized the protocol
Mints new ARTH tokens
The trading fee is used to drive revenue for ARTH holders.
Redemption fees are used as a mechanism to encourage or discourage collateral redemption from within the protocol. Redemption fees are charged in MAHA tokens and are calculated as a percentage of the collateral that is being redeemed.
When Governance decides that the protocol is under high risk and is about to lose it's collateral, it sets the redemption fee at a higher percentage (from 5-20%). When Governance decides that the protocol is under low risk, then the redemption fees are reduced to 1-5%.