> ## Documentation Index
> Fetch the complete documentation index at: https://docs.parquet.exchange/llms.txt
> Use this file to discover all available pages before exploring further.

# Fees & Costs

> Position fees, tiered fees, funding rates, borrowing fees, and how fees are distributed.

This page is the **canonical source of truth** for Parquet's fee and risk parameters. Where other pages (the [glossary](/reference/glossary), [FAQ](/reference/faq), or [Contracts](/network/contracts)) restate a number, this table is authoritative.

## Fee & risk parameters at a glance

| Parameter                                           | Value                                                                                                                 |
| --------------------------------------------------- | --------------------------------------------------------------------------------------------------------------------- |
| Open / close fee — base                             | **0.1%** of notional                                                                                                  |
| Open / close fee — favorable (reduces OI imbalance) | **0.05%** of notional                                                                                                 |
| Funding rate cap                                    | **300% APR** (≈0.82% / day)                                                                                           |
| Liquidation fee                                     | **20% of remaining equity** at liquidation (capped at equity, split 50/50 liquidator / insurance fund)                |
| Initial margin                                      | **50 bps** (0.5%) of notional → **200×** max openable, venue-wide                                                     |
| Maintenance margin ratio (MMR)                      | **40 bps** (0.4%) venue-wide                                                                                          |
| Open-interest cap per market                        | **$5M** during RTH / **$500K** off-hours (**\$100K** off-hours for ASML, COST, RIVN, IBM, DELL)                       |
| Max leverage (tiered by position size)              | **200× → 10×** — the same tiers apply RTH and off-hours (200× on the smallest tier, set by the 50 bps initial margin) |
| Minimum collateral                                  | **\$10** USDC                                                                                                         |
| Fee distribution                                    | LP **50%** / staker **31.25%** / treasury **12.5%** / referral **6.25%**                                              |

The remaining sections explain each of these in more detail.

## Position fees

A fee is charged when you open or close a position. The fee is calculated as a percentage of the position size.

Each market has a **base fee rate** applied to all trades. Markets also support a **favorable fee rate** — a lower rate applied to trades that reduce the open interest imbalance between longs and shorts. This incentivizes balanced open interest across the protocol.

| Action                              | OI effect           | Fee rate applied |
| ----------------------------------- | ------------------- | ---------------- |
| Open long when long OI > short OI   | Increases imbalance | Base rate        |
| Open long when long OI \< short OI  | Reduces imbalance   | Favorable rate   |
| Close long when long OI > short OI  | Reduces imbalance   | Favorable rate   |
| Close long when long OI \< short OI | Increases imbalance | Base rate        |

The same logic applies in reverse for short positions. When favorable fees are not configured for a market, the base rate is used for all trades.

## Funding rate

The funding rate is a periodic payment between long and short position holders, based on the open interest imbalance.

* The side with **larger aggregate open interest** pays the other side — and the lighter side **receives** funding.
* Funding accrues continuously and is settled when you close or modify your position.
* The funding rate is updated automatically at regular intervals.
* The funding rate is **capped at 300% APR** (≈0.82% per day), enforced on-chain.

Funding incentivizes balanced open interest: when one side dominates, its holders pay a premium to the other side. Because the rate is **capped**, the cost of holding even a heavily one-sided position is **bounded** — funding can never spiral, no matter how crowded a market gets.

## Borrowing fees

Borrowing fees are a time-based cost proportional to your position size and pool utilization. They accrue continuously from the moment you open a position until you close it.

Borrowing fees are charged on position close, margin update, or liquidation.

## Fee distribution

All fees flow through a multi-step distribution process:

1. **Accrue** — Each trade splits the fee at the pool level. The LP share goes to liquidity providers (increasing the value of their LP tokens). The remainder accumulates as pending non-LP fees.
2. **Distribute** — The remaining collected fees are periodically distributed to stakers, the treasury, and the referral reward pool.

## Deposit and withdrawal fees

The liquidity pool may charge a fee on deposits and withdrawals. When applicable, the fee is deducted before LP tokens are minted (on deposit) or before USDC is returned (on withdrawal).

## Minimum collateral

Positions require a minimum of $10 USDC collateral. This applies when opening a position, creating an increase order, partially closing a position (remaining collateral must stay above $10), and removing margin.