Title: SaucerSwap V3 Launch Economics
Author(s): SaucerSwap Labs
SaucerSwap Voting Interface: TBA
Related Discussions: SaucerSwap V3 Launch Economics [RFC]
Submission Date: May 26, 2026
Summary
This proposal establishes the launch economic framework for SaucerSwap V3 and updates protocol fee routing so that each source of value is routed according to the part of the protocol it supports.
V3 introduces a central limit order book with market-level maker/taker fees, maker rebates, xSAUCE fee discounts, and net-fee routing through BrewSaucer. Because V3 differs from V1/V2 AMMs, this proposal routes V1/V2-aligned flows and V3 net fees separately rather than through one blended framework.
Under the proposed structure, V1/V2 fee-switch flows and HBAR native staking rewards route primarily toward xSAUCE (i.e., SAUCE staking), burn, and V1/V2 liquidity incentives. V3 net fees route primarily toward xSAUCE, burn, and protocol development because V3 liquidity incentives are funded directly by taker fees through maker rebates, not SAUCE emissions.
| Source | xSAUCE | Development Fund | Burn | POL + Incentive Reserve |
|---|---|---|---|---|
| V1/V2 fee-switch flow + HBAR native staking rewards | 50% | 10% | 10% | 30% |
| V3 net fees | 30% | 60% | 10% | 0% |
| MasterChef devcut | Direct SAUCE allocation to xSAUCE staking pool / Mothership | - | - | - |
Abstract
This proposal asks the DAO to approve five initial V3 markets, a two-tier maker/taker fee schedule, maker rebate safety clamps, xSAUCE fee discount tiers, and source-specific fee routing for V1/V2-aligned flows and V3 net fees.
The initial V3 fee schedule is intentionally simple: non-stable markets are set at 12 bps taker / -0.20 bps maker, and stable-stable markets at 6 bps taker / -0.05 bps maker. Maker rebates are capped after xSAUCE discounts at 25% of effective taker fees on non-stable markets and 10% on stable-stable markets.
V3 net protocol fees equal taker fees collected minus maker rebates paid. Those net fees are converted into SAUCE through BrewSaucer and routed under the V3-specific framework. V1/V2 fee-switch flows and HBAR native staking rewards remain BrewSaucer-routed but use a separate AMM-aligned framework. The MasterChef devcut remains a direct xSAUCE staking allocation, not a BrewSaucer-routed flow.
Current state and what changes
The current fee-routing framework is organized around the existing AMM stack. This proposal keeps the existing mechanisms recognizable, but makes routing source-specific so that each source of value supports the system it is economically closest to.
| Component | Current treatment | Proposed treatment |
|---|---|---|
| V1/V2 fee-switch flows and HBAR native staking rewards | BrewSaucer-routed. Baseline: 45.5% xSAUCE, 30% Development Fund, 24.5% POL + Incentive Reserve (12.25% Asset Expansion, 12.25% HBAR incentives), no burn. | BrewSaucer-routed AMM-aligned allocation: 50% xSAUCE, 10% Development Fund, 10% burn, 30% POL + Incentive Reserve. |
| MasterChef devcut | Modeled as a direct xSAUCE staking allocation (30% of total), not as BrewSaucer-routed flow. | Unchanged. Direct xSAUCE staking allocation only. |
| V3 net fees | No current production routing because V3 has not launched. | BrewSaucer-routed using V3-specific allocation: 30% xSAUCE, 60% Development Fund, 10% burn. |
Motivation
Alignment by source
V1/V2 and V3 should not share the same downstream buckets by default. V1 and V2 are AMMs whose liquidity is still supported by MasterChef and LARI incentives. For those sources, SAUCE recirculation is most directly tied to sustaining liquidity incentives and AMM market quality, especially post-emissions.
V3 is different. Its native launch incentive is the maker rebate, paid only when resting liquidity is filled and funded directly from taker fees. Because V3 incentives are embedded in the order-book fee model, routing V3 net fees into a V1/V2 incentive reserve is less aligned than routing them toward xSAUCE utility, supply discipline, and continued V3 development.
V3 requires ongoing development, not only incentives
V3’s long-run value depends on continued order-book infrastructure development: market-maker tooling, API reliability, routing, execution quality, analytics, integrations, and future V3-adjacent products. This RFC does not approve perpetuals or any perpetuals fee model, which requires separate governance treatment. The higher V3 Development Fund allocation is a source-specific reinvestment channel for the infrastructure that makes V3 useful and competitive.
The V3 Development Fund allocation funds V3 through protocol economics rather than a separate trade-page interface fee. The 60% launch allocation reflects expected infrastructure, API, market-maker support, analytics, integration, audit, and V3 operations costs. By contrast, the V1/V2 Development Fund allocation falls from 30% to 10% because mature AMM maintenance and development costs are expected to be lower than V3 launch and growth costs.
At the same time, this proposal reduces the Development Fund allocation from V1/V2 fee-switch flows and HBAR native staking rewards. Those sources are more directly tied to AMM liquidity sustainment, so routing shifts toward xSAUCE, burn, and POL + Incentive Reserve rather than development funding. This keeps V1/V2-generated value closer to the liquidity programs supporting V1/V2 volume.
xSAUCE and burn remain protocol-wide
xSAUCE and burn apply across both source categories. xSAUCE connects SAUCE to protocol usage by giving traders and market makers fee discounts. Burn provides predictable supply discipline. Both fit V1/V2-aligned flows and V3 net fees.
Specification & Rationale
1. Initial V3 market slate
This proposal approves the following initial V3 markets. Note that additional V3 markets must be approved through governance before listing.
| Market | Category |
|---|---|
| HBAR-USDC | Non-stable |
| WETH-USDC | Non-stable |
| WBTC-USDC | Non-stable |
| SAUCE-USDC | Non-stable |
| USDT0-USDC | Stable-stable |
2. Launch maker/taker fee schedule
This proposal approves a two-tier launch fee schedule:
| Market category | Taker fee | Maker fee | Maker rebate cap |
|---|---|---|---|
| Non-stable markets | 12 bps | -0.20 bps | 25% of effective taker fees collected |
| Stable-stable markets | 6 bps | -0.05 bps | 10% of effective taker fees collected |
The non-stable tier bootstraps liquidity across the core V3 launch book while preserving protocol economics. The stable-stable tier uses lower fees because stable convergence markets are more fee-sensitive and should function as efficient conversion rails.
The maker rebate safety clamp applies after xSAUCE discounts. Assuming a 10% weighted-average xSAUCE discount, the non-stable tier collects 10.80 bps of effective taker fees and caps maker rebates at 2.70 bps, above the proposed -0.20 bps launch rebate. The stable-stable tier collects 5.40 bps and caps rebates at 0.54 bps, above the proposed -0.05 bps launch rebate.
On a weighted basis, the launch market mix implies an 11.73 bps average taker fee and a 10.36 bps weighted-average V3 net fee after a 10% weighted-average xSAUCE discount.
3. xSAUCE fee discount tiers
This proposal approves the following launch xSAUCE discount tiers. The USD equivalents use an xSAUCE price assumption of $0.025 for the fee-tier table.
| Tier | xSAUCE threshold | USD equivalent at $0.025 | Discount |
|---|---|---|---|
| 1 | 10,000 | $250 | 5% |
| 2 | 50,000 | $1,250 | 10% |
| 3 | 250,000 | $6,250 | 15% |
| 4 | 1,000,000 | $25,000 | 20% |
| 5 | 5,000,000 | $125,000 | 30% |
| 6 | 10,000,000 | $250,000 | 40% |
The discount percentages preserve the Hyperliquid-style curve while adapting thresholds to SaucerSwap’s smaller current staking base and actual xSAUCE holder distribution. The upper tiers remain scarce without being structurally unreachable.
xSAUCE discounts apply to the market’s baseline fee schedule. If the taker or maker fee is positive, xSAUCE reduces what that trader pays. If the maker fee is negative, xSAUCE increases the maker rebate, subject to the rebate safety clamp.
4. Source-specific routing
This proposal approves source-specific routing for BrewSaucer-routed flows. The MasterChef devcut is not BrewSaucer-routed and remains a direct xSAUCE staking allocation.
| Source | xSAUCE | Development Fund | Burn | POL + Incentive Reserve |
|---|---|---|---|---|
| V1/V2 fee-switch flow + HBAR native staking rewards | 50% | 10% | 10% | 30% |
| V3 net fees | 30% | 60% | 10% | 0% |
| MasterChef devcut | Direct to xSAUCE | - | - | - |
The initial V3 net-fee routing split will be reviewed after V3 has sufficient live operating data. In the first governance review window after launch, the DAO should evaluate realized V3 volume, net fee generation, maker rebate usage, xSAUCE discount uptake, and V3 development runway. Based on that data, governance may consider increasing the V3 xSAUCE allocation while preserving sufficient V3 development funding.
5. POL + Incentive Reserve deployment
The POL + Incentive Reserve allocation applies only to V1/V2 fee-switch flows and HBAR native staking rewards. It supports V1/V2 liquidity incentives while remaining a flexible DAO-controlled bucket for broader V1/V2 liquidity support, including farm rewards, LARI rewards, HBAR incentive routing, and other DAO-approved liquidity programs.
| Use | Share of AMM-aligned BrewSaucer flow | Implementation |
|---|---|---|
| SAUCE incentives | 15% | Retained as SAUCE and distributed to V1 pools as farm rewards and V2 pools as LARI rewards through the existing incentive systems. |
| HBAR incentives | 15% | Converted to HBAR on a per-epoch basis, then distributed to V1 pools as farm rewards and V2 pools as LARI rewards through the existing incentive systems. |
| Total POL + Incentive Reserve | 30% | All POL + Incentive Reserve funds support V1/V2 liquidity incentives and are additional to current MasterChef SAUCE emissions. |
Pool-level distribution should follow DAO-approved farm and LARI weights for each epoch unless governance approves a separate allocation. This keeps routing explicit while preserving the existing governance process for pool-level incentive weights.
Governance-Controlled Parameters
-
Market creation and closure policy.*
-
Market-level maker and taker fee tiers.
-
Maker rebate parameters and maker rebate safety clamps.
-
xSAUCE fee discount tiers and eligibility thresholds.
-
Source-specific BrewSaucer routing percentages for V1/V2-aligned flows, HBAR native staking rewards, and V3 net fees.
-
Burn allocation.
-
POL + Incentive Reserve deployment rules and pool-level incentive weights.
*Emergency market pauses may be executed for security, technical, legal, or asset-integrity reasons, and should be followed by DAO review where practical.
Model Impact
Figures below are volume-normalized rather than forecast-driven. They do not require voters to accept a specific 2026 or 2027 volume path, but show how the framework behaves per unit of realized routed value or trading activity. Outputs scale with actual volume, source mix, buyback execution, xSAUCE tier uptake, market-maker behavior, and future governance decisions.
Routing impact per $100K of BrewSaucer-routed value
The table below shows the proposed source-specific routing for BrewSaucer-routed value after conversion into SAUCE. HBAR native staking rewards are included with V1/V2-aligned flows because they pass through BrewSaucer; the MasterChef devcut is not BrewSaucer-routed and remains a direct xSAUCE staking allocation.
| Source | xSAUCE | Development Fund | Burn | POL + Incentive Reserve |
|---|---|---|---|---|
| V1/V2 fee-switch + HBAR native staking rewards | $50.0K | $10.0K | $10.0K | $30.0K |
| V3 net fees | $30.0K | $60.0K | $10.0K | $0 |
| MasterChef devcut | Direct to xSAUCE | - | - | - |
For V3 net fees, the full $100K is allocated as $30K to xSAUCE, $60K to the Development Fund, and $10K to burn; $0 is routed to the POL + Incentive Reserve under the launch framework.
For V1/V2-aligned flows, the 30% POL + Incentive Reserve allocation is entirely for V1/V2 liquidity incentives: 15% retained as SAUCE incentives and 15% converted to HBAR incentives. Pool-level distribution follows DAO-approved farm and LARI weights for each epoch unless governance approves a separate allocation.
Volume-normalized fee impact per $100M of realized trading volume
For trading-fee-driven sources, the same mechanics can be shown per $100M of realized volume. V1 uses a 30 bps gross swap fee with a 1/6 protocol cut (5.00 bps). V2 uses the current 16.505 bps implied effective fee rate with the same 1/6 cut (about 2.75 bps). V3 uses the modeled 10.36 bps weighted-average net fee after xSAUCE discounts and maker rebates.
| Source | Routed value per $100M volume | xSAUCE | Development Fund | Burn | POL + Incentive Reserve |
|---|---|---|---|---|---|
| V1 volume | $50.0K | $25.0K | $5.0K | $5.0K | $15.0K |
| V2 volume | $27.5K | $13.8K | $2.8K | $2.8K | $8.3K |
| V3 volume | $103.6K | $31.1K | $62.2K | $10.4K | $0 |
xSAUCE APR sensitivity
The xSAUCE APR impact scales with the amount routed to staking. Assuming $10.0M xSAUCE staking TVL, each $100K of annualized xSAUCE rewards contributes about 1.00% APR. The direct MasterChef devcut remains additive to this staking stream and does not pass through BrewSaucer.
| Annualized xSAUCE allocation | Implied APR at $10.0M xSAUCE TVL |
|---|---|
| $100K | 1.00% |
| $250K | 2.50% |
| $500K | 5.00% |
| $1.0M | 10.00% |
V1/V2 liquidity incentive APR sensitivity
The POL + Incentive Reserve allocation affects the Reward APR component only. Fee APR, Stader APR, xSAUCE APR, and other APR components are not changed by this routing proposal. The sensitivity below shows the Reward APR impact if an annualized reward allocation is directed to a given pool group.
| Annualized reward allocation | V1 active farm pools ($6.07M liquidity base) | V2 LARI-rewarded pools ($24.28M liquidity base) |
|---|---|---|
| $100K | +1.65% Reward APR | +0.41% Reward APR |
| $250K | +4.12% Reward APR | +1.03% Reward APR |
| $500K | +8.24% Reward APR | +2.06% Reward APR |
Actual pool-level APR changes depend on DAO-approved incentive weights for each epoch and the liquidity base when rewards are distributed.
Burn output sensitivity
The burn is modeled at 10% of BrewSaucer-routed value from V1/V2 fee-switch flows, HBAR native staking rewards, and V3 net fees. The direct MasterChef devcut is excluded from burn routing. The table uses a $0.020 per SAUCE burn conversion assumption. Annual mint is based on 2.3254 SAUCE/sec (emissions plus devcut), or about 73.3M SAUCE/year, with circulating supply assumed at 898M SAUCE as of May 15, 2026.
| Annualized burn value | SAUCE burned at $0.020 | Offset of annual mint | Inflation reduction vs 898M supply | Net deflationary? |
|---|---|---|---|---|
| $100K | 5.0M | 6.8% | 0.56 pp | No |
| $500K | 25.0M | 34.1% | 2.78 pp | No |
| $1.0M | 50.0M | 68.2% | 5.57 pp | No |
| >$1.47M | >73.3M | >100.0% | >8.17 pp | Yes |
Net deflationary status is reached only if SAUCE burned exceeds SAUCE minted during the period. The burn first acts as an issuance offset and supply-discipline mechanism; whether it becomes net deflationary depends on realized routed value and SAUCE price at burn execution.
Pros
-
Establishes clear launch parameters for V3 rather than leaving order-book economics undefined.
-
Uses a simple two-tier fee model that is easy to implement, explain, and govern.
-
Introduces maker rebates to support early order-book liquidity while keeping rebates tied to actual fills.
-
Applies safety clamps to prevent maker rebates from overwhelming collected taker fees.
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Gives xSAUCE direct protocol-level utility through trading fee discounts and rebate boosts.
-
Uses source-specific routing so V1/V2-aligned flows support AMM liquidity while V3 net fees support V3 development, xSAUCE, and burn.
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Adds a predictable burn allocation across BrewSaucer-routed sources.
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Keeps V1/V2 liquidity incentives funded through a clear SAUCE/HBAR reward path in addition to current MasterChef SAUCE emissions.
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Creates a durable development funding path for V3 infrastructure, market-maker tooling, API improvements, and future V3-adjacent products, subject to separate governance approval where required.
Cons
-
Source-specific routing is more complex than a single blended allocation framework.
-
V3 net fees do not directly fund the POL + Incentive Reserve under this structure, so AMM incentive support depends primarily on V1/V2 fee-switch flows and HBAR native staking rewards.
-
The V3 Development Fund allocation will require periodic governance review to ensure it remains aligned with product execution and protocol needs.
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Maker rebates may attract low-quality or self-referential activity if monitoring and anti-abuse controls are insufficient.
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The proposed non-stable taker fee may be too high for some markets if market quality or routing depth does not materialize quickly.
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The xSAUCE tier schedule may require adjustment if participation concentrates too quickly or if top-tier eligibility remains too thin.
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Market-level assumptions are based on projections and should be reassessed once real V3 trading data is available.
Voting Options
YES - Approve
Approve the initial V3 market slate, governance-controlled V3 market creation, launch maker/taker fee schedule, maker rebate clamps, xSAUCE discount tiers, and source-specific fee routing. V1/V2 fee-switch flows and HBAR native staking rewards route 50% to xSAUCE, 10% to Development Fund, 10% to burn, and 30% to POL + Incentive Reserve. V3 net fees route 30% to xSAUCE, 60% to Development Fund, and 10% to burn. MasterChef devcut remains a direct xSAUCE staking allocation.
NO - Reject
Reject the proposed V3 launch tokenomics framework. Existing V1/V2 routing remains unchanged, and V3 launch market parameters, xSAUCE discount tiers, source-specific routing, burn allocation, and V3 fee routing require a new governance proposal.
ABSTAIN
Abstain from voting on this proposal.
Appendix A - Initial V3 Market Matrix
| Market | Taker | Maker | Net fee after 10% avg xSAUCE discount |
|---|---|---|---|
| HBAR-USDC | 12 bps | -0.20 bps | 10.60 bps |
| WETH-USDC | 12 bps | -0.20 bps | 10.60 bps |
| WBTC-USDC | 12 bps | -0.20 bps | 10.60 bps |
| SAUCE-USDC | 12 bps | -0.20 bps | 10.60 bps |
| USDT0-USDC | 6 bps | -0.05 bps | 5.35 bps |
Appendix B - xSAUCE Discount Tiers
| Tier | xSAUCE threshold | USD equivalent at $0.025 | Discount |
|---|---|---|---|
| 1 | 10,000 | $250 | 5% |
| 2 | 50,000 | $1,250 | 10% |
| 3 | 250,000 | $6,250 | 15% |
| 4 | 1,000,000 | $25,000 | 20% |
| 5 | 5,000,000 | $125,000 | 30% |
| 6 | 10,000,000 | $250,000 | 40% |
Appendix C - Routing Summary
| Source | Bucket | Share |
|---|---|---|
| V1/V2 fee-switch + HBAR native staking rewards | xSAUCE | 50% |
| V1/V2 fee-switch + HBAR native staking rewards | Development Fund | 10% |
| V1/V2 fee-switch + HBAR native staking rewards | Burn | 10% |
| V1/V2 fee-switch + HBAR native staking rewards | POL + Incentive Reserve | 30% |
| V3 net fees | xSAUCE | 30% |
| V3 net fees | Development Fund | 60% |
| V3 net fees | Burn | 10% |
| MasterChef devcut | Direct xSAUCE staking allocation | Unchanged |