SaucerSwap V3 Order Book Calibration: Contract Migration, Market Set, and Fee Configuration

Request for Comment
1

Title: RFC - SaucerSwap V3 Order Book Calibration: Contract Migration, Market Set, and Fee Configuration

Author(s): SaucerSwap Labs

SaucerSwap Voting Interface: TBA

Related Discussions: SaucerSwap V3 Launch Economics [RFC] (topic 360); Create DOVU/TRUST Pool on V2 (topic 372)

Submission Date: July 9, 2026

Summary

SaucerSwap Labs proposes relaunching the V3 order book on an upgraded, independently audited settlement contract. This serves as a calibration to the V3 fee structure after several weeks of mainnet operation. The five current markets will be wound down (open orders auto-cancelled; user funds are never held by the order book) and a new market set launched with revised fees, maker rebates, and minimum order sizes grounded in measured on-chain data. The calibration introduces order-book quoting into the web and mobile trade flow, so users are always shown the better of the AMM route or the order-book price. Finally, this proposal does not reopen the source-specific SAUCE routing, xSAUCE fee tiers, burn routing, V1/V2 fee-switch treatment, HBAR native staking treatment, or MasterChef devcut treatment approved in SaucerSwap V3 Launch Economics.

Abstract

The V3 order book launched in June 2026 with five USDC-quoted markets. Measured results over the books’ live history (~30 days) show the markets did not develop organic activity: median fill sizes sat below the network settlement cost the protocol pays per fill, maker rebates were too small to attract quoting, and the trade page never routed user flow to the book. This RFC proposes: (1) migrating to an upgraded settlement contract (follow-on audit by Halborn), (2) winding down the current five markets, (3) launching a revised market set — SAUCE/HBAR, DOVU/HBAR, WETH/HBAR, SAUCE/USDC, and HBAR/USDC — with fees, rebates at the maximum 25% rebate cap, and minimum order sizes set from measured data, (4) routing integration: the trade page and mobile app quote both the AMM route and the order book and execute whichever is better for the user (order-book routes carry no interface fee and no user-paid network fee), and (5) a delegated-inventory structure for the DOVU/HBAR market in which the DOVU treasury delegates market-making inventory under written terms.

From a SAUCE tokenomics perspective, this is a market-level calibration rather than a routing rewrite. Maker rebates remain funded from taker fees, not new SAUCE emissions. Any V3 net fees generated after rebates continue to flow into the previously approved V3-specific BrewSaucer routing path, while xSAUCE utility, burn routing, V1/V2 liquidity incentive routing, HBAR native staking treatment, and MasterChef devcut treatment remain unchanged.

Motivation

Three measured problems motivate the calibration:

  1. Distribution. The swap router has never included order-book quotes; over 25 days of continuous two-sided quoting, the book’s market maker received zero external fills. A venue without routed demand cannot develop.
  2. Unit economics. The protocol pays the network settlement fee for every order-book fill (measured median $0.036 per fill). At the current 12 bps taker fee and observed ~$30 median fills, settlement costs equalled or exceeded fee revenue. Minimum order sizes must sit above per-fill breakeven, and did not.
  3. Maker economics. The launch rebate (−0.2 bps) is not economically felt by a market maker. Rebates should sit at the existing 25% rebate-cap maximum per market, with written terms, so that professional makers can quote competitively.

The migration to an upgraded settlement contract is the natural moment to correct all three, and market creation on V3 is a governance matter (per the V3 Launch Economics proposal).

Specification & Rationale

1. Contract migration and wind-down

  • The upgraded settlement contract (reactor) will complete a follow-on audit by Halborn before mainnet deployment.
  • The order book holds no user funds: orders are signed intents, and tokens remain in user wallets until the moment of fill. Wind-down therefore requires no withdrawals or claims. Open orders (371 at the time of writing, the large majority from market-making programs) will be cancelled server-side on the cutover date with prior announcement; affected wallets with open orders will be notified directly.
  • Users who traded on the old book will complete a one-time approval of the new contract on their first trade (token associations and Permit2 approvals carry over).

2. Relaunch market set and configuration

Maker fees are rebates paid to makers (shown negative). Listed maker rebates are calibrated to the existing 25% rebate cap. The listed rebate is the maximum no-discount level; on each fill, the applied rebate remains capped at 25% of effective taker fees collected after xSAUCE fee tiering. Minimum order sizes are set at or above the measured per-fill settlement breakeven for each market — roughly 1.5–2.5× for the majors and ~3× or more for DOVU/HBAR.

Market Taker fee Maker rebate Net protocol fee Minimum order Role
SAUCE/HBAR 20 bps −5 bps 15 bps ~$50 (HBAR-denominated) Primary; largest SAUCE-native volume ($28.6k/day measured, 90d)
DOVU/HBAR 80 bps −20 bps 60 bps ~$25 (350 HBAR) Guarded pilot for long-tail markets; delegated-inventory structure (below)
WETH/HBAR 10 bps −2.5 bps 7.5 bps ~$100 Primary; direct ERC-20 WETH market (measured $7.0M/30d of WETH demand on the adjacent AMM lane)
SAUCE/USDC 25 bps −6.25 bps 18.75 bps $40 Stable-quoted anchor for the protocol token
HBAR/USDC 12 bps −3 bps 9 bps $100 Benchmark/control market against the deepest AMM pool; excluded from default routing at launch

Markets under observation for a second wave (subject to the first wave meeting its published health thresholds): WETH/USDC and WBTC/USDC (continuing on their direct ERC-20 bases), and JAM/HBAR (allowlisted maker, higher guard rails). USDT0/USDC will be wound down and not relaunched: at stable-stable fee levels, no observed fill ever covered its settlement cost, and the 5 bps AMM pool is cheaper than the book’s fee alone. WBTC/HBAR is deferred pending the recent draining of its reference AMM pool.

Rationale for pair-specific fees: each market’s taker fee is set against its real user alternative, measured on-chain (for example, DOVU/HBAR’s alternative is a 1% AMM pool whose measured all-in cost is 101–258 bps by size; SAUCE/USDC’s realistic alternative is a two-hop route costing 46–59 bps). A single global fee cannot fit both deep majors and long-tail markets.

3. Routing integration and the interface fee

The trade page (web and mobile) will request both the AMM (V1/V2 smart-order-router) quote and an order-book quote, and present the route that is better for the user all-in. Order-book routes are shown only when at least 5 bps better, fully fillable, and within quote freshness limits. The HBAR/USDC market is excluded from default routing at launch and serves as a benchmark market; its inclusion is a separate, data-gated decision. The comparison uses what the user actually pays on each path: interface fees (0.25% web / 0.50% mobile under the fee schedule effective at relaunch) and user-paid network fees apply to AMM routes; order-book routes carry no interface fee, and the protocol pays the settlement fee. This is a deliberate structural discount on order-book execution; the protocol absorbs the forgone interface revenue, and this trade-off was priced into the market set above.

This routing change does not alter source-specific SAUCE routing. It changes the probability that V3 produces routed fills and therefore V3 net fees; those net fees continue to follow the approved V3-specific BrewSaucer routing framework, theoretically resulting in greater buybacks and recirculation of SAUCE through the protocol.

4. DOVU/HBAR delegated-inventory structure

Long-tail markets fail when makers must warehouse unhedgeable token risk. For DOVU/HBAR, SaucerSwap Labs and the DOVU treasury are finalizing terms under which DOVU would delegate market-making inventory (proposed: 10,000,000 DOVU) to a segregated account operated by Skynet, an allowlisted market maker (see Proposal 6153); the market launches only once these terms are executed. Under the proposed structure: the inventory and its token-price exposure remain DOVU’s; the maker earns quoting economics (spread and rebate); SaucerSwap provides the HBAR quote-side inventory; monthly reporting; either party may terminate on 7 days’ notice. This structure is the template for future long-tail listings where the token’s own treasury wants order-book liquidity.

5. Monitoring and stop conditions

Each market publishes a 72-hour launch scorecard and ongoing health metrics: venue net revenue (after rebates, settlement, and displaced AMM protocol/interface fees), maker health (including adverse-selection statistics with stated conventions), routed-win counts, fill-size distributions, and AMM-substitution share. Any market that fails its thresholds is capped, paused, or rolled back without a new vote; parameter increases beyond the ranges in this RFC return to governance.

Reporting should also show the tokenomics bridge: taker fees collected, maker rebates paid, V3 net fees generated, V3 net fees routed through BrewSaucer, and resulting source-specific allocations to xSAUCE, Development Fund, and burn. This makes the calibration more comprehensively auditable against the passed V3 Launch Economics framework.

Benefits (Pros)

  • Users get strictly better execution: the trade page picks the better route, and order-book routes carry no interface fee and no user-paid network fee.
  • Market makers get economically real rebates (at cap), written terms, and routed flow — the three measured absences that stalled the June launch.
  • The protocol stops paying settlement on money-losing fills (minimums above breakeven; one market wound down outright).
  • Long-tail tokens get a viable listing template (delegated inventory) that does not ask makers to warehouse unhedgeable risk.
  • An audited, upgraded settlement contract with corrected admin/fee-sweep wiring.
  • The relaunch preserves the passed SAUCE tokenomics framework while improving the likelihood that V3 produces real fee flow for xSAUCE, V3 development, and burn.
  • Higher maker rebates remain non-inflationary because they are funded from taker fees on executed fills rather than new SAUCE issuance.

Downside (Cons)

  • Order-book routing displaces some V1/V2 LP fee income and some interface-fee revenue where the book wins (measured estimate for the pilot market: LP fee displacement of roughly $20–25k/yr at modeled capture). This is genuine price competition inside our own venue set; the DAO should adopt it consciously.
  • Direct order-book revenue at current volumes is modest (tens of thousands of dollars per year across the set at current run-rates); the case rests on execution quality and venue strategy, not near-term P&L.
  • The wind-down cancels open orders (with notice); users with resting limit orders must re-place them on the new markets.
  • Long-tail markets (DOVU, later JAM) carry tail risk that guard rails mitigate but cannot remove.
  • Setting maker rebates at the 25% cap improves maker economics but reduces the V3 net-fee share retained by the protocol on each fill compared with lower-rebate configurations.

Voting

This RFC seeks feedback on the full package. The subsequent Proposal will offer:

  • For — adopt the calibration as specified (contract migration, wind-down, market set and configurations, routing integration, delegated-inventory structure). No change to source-specific SAUCE routing framework, xSAUCE fee tiers, burn routing, V1/V2 fee-switch treatment, HBAR native staking treatment, or MasterChef devcut treatment.
  • No change — retain the current V3 markets and configuration.
  • Abstain

Parameter latitude: within this mandate, SaucerSwap Labs may adjust each market’s taker fee within ±50% of the listed value, hold maker rebates at or below the 25% cap, and adjust minimum order sizes within 1–3× the measured settlement breakeven, in each case with public disclosure and only in response to the published health thresholds. New markets, fee changes beyond these bands, or changes to the routing rule return to governance.

1 Like
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Thanks for the transparent post-launch assessment Larry. Acknowledging that the June launch didn’t develop organic activity and proposing concrete calibration rather than waiting it out is exactly the right approach.

A few questions:

On the HBAR/USDC benchmark exclusion, the proposal says inclusion in default routing is a separate data-gated decision but doesn’t specify what thresholds need to be met. Given HBAR/USDC is the deepest AMM pool on the protocol and the one most users interact with, what specific health metrics would need to be demonstrated before it gets included in routing?

On the DOVU/HBAR delegated inventory structure, the 7 day termination clause on either side is a real concern for market continuity. If DOVU withdraws their 10 million DOVU inventory on 7 days notice, does the market get paused immediately or does Skynet have a wind-down period to maintain quotes? And is there a minimum commitment period before either party can invoke termination?

On the routing integration, the proposal notes order book routes carry no interface fee while AMM routes carry 0.25% web and 0.50% mobile. That’s a meaningful structural discount for order book execution. Has there been any modeling on the break-even volume needed for V3 net fees to offset the displaced interface fee revenue at those discount levels?

Looking forward to seeing the calibration move forward.

3

Thanks, @DeFiMike. These are good questions, and you’re right that some operating details remain to be finalized.

HBAR/USDC will remain excluded from routing unless the universal router is completed and validated in time for the relaunch. If it is ready, the market may be eligible from day one, with V3 selected only when it provides a fresh, fully executable, better all-in quote than V1 or V2. This avoids relying on arbitrary market-specific liquidity thresholds as the basis for routing.

The separate issue is economic. Under the current fee configuration, shifting existing interface flow from the AMM to V3 would forgo more interface and AMM protocol revenue than V3 earns. We would therefore monitor the actual mix of displaced and genuinely incremental or programmatic volume, adjusting the routing or fee policy if the market proves uneconomic.

For DOVU/HBAR, the proposed structure is 10 million DOVU held either in a DOVU-controlled account delegated to Skynet or in a segregated, Skynet-operated account, depending on whether the Reactor V2 contract is audited and deployed in time for the relaunch. SaucerSwap Labs will provide the inventory for the other side of the book, also managed by Skynet.

In either case, the arrangement will include monthly reporting, termination by either party on seven days’ notice, and written terms that must be executed before launch. The notice period is intended to allow an orderly wind-down rather than an immediate shutdown. The precise quoting obligations during that period, along with any minimum initial commitment, are still being finalized. If normal quoting standards can no longer be maintained, the market would be removed from routing and paused under the proposal’s stop conditions.

More broadly, one objective of the relaunch is to improve maker incentives so that V3 becomes less dependent on any single liquidity provider over time.

Interface-fee displacement was included in the model. HBAR/USDC retains 9 bps after the maker rebate but before settlement costs. By comparison, moving an AMM interface trade to V3 gives up the 25 bps web or 50 bps mobile interface fee, plus approximately 2.5 bps of AMM protocol revenue.

Purely displaced interface flow therefore has negative unit economics. Before settlement costs, total V3 volume would need to equal approximately 3.1 times the displaced interface volume in a web-only case, 5.8 times in a mobile-only case, or 4.4 times under an illustrative 50/50 mix. The difference would need to come from genuinely incremental or programmatic volume.

Thanks again for raising these points.