Recently, with the support from Inspex which is the top blockchain auditor in Thailand, we’ve found an issue that affected the fee structure of the platform. We have worked on it and decided to make a report about the issue and the solutions as a transparency report to let you know what happened.
An issue with PancakeSwap V1 Fee Structure
Inspex has found that there is an issue about how to calculate a fee on PancakeSwap V1-based code. Without this issue, a 0.2% fee will be paid for each trade. 0.17% will go to liquidity providers and 0.03% will go to the platform’s treasury. By the way, there is a wrong variable in the fee calculation formula and this miscalculation made the ratio change. It turns out that the liquidity providers get less percent (0.15% instead of 0.17%) and more percent will go to the platform’s treasury (0.05% instead of 0.03%).
The result of the issue has made most of all the DeFi platforms that inherited the formula of fee calculation from the PancakeSwap V1 code likely to conduct a higher amount of the fee than it should be.
Definix is a platform that has implemented the inherited fee structure from PancakeSwap V1. After Inspex informed us about this issue, we investigated our code and found the same issue occurred with our platform. That means what should go to our liquidity providers is less than it should be and what should go to the platform’s treasury is also higher than it should be, according to our announced fee structure.
The Solutions for The Issue
We have decided to do the following things in order to make it proper and transparent to our users;
1. Burn the excess amount of fees in the process of buyback and burn
The practical solution for dealing with the excess amount of the fees is to buy back and burn, which we’ve already done before this issue was found. Normally, we’re bringing a part of what we get from the fees to burn as a buyback and burn process. That means all the excess amount from the higher cut is already burned. The buyback and burn process will continue as a deflationary mechanic for FINIX and all the excess fees in the future will be burned in this process. This is a practical solution that is fair for users since the excess amount of the fees is spent to reduce the supply of FINIX. The activity has a positive impact on FINIX price.
You can check all the past transactions for the buyback and burn process as following;
2. Implement the right fee structure to Definix on Klaytn Chain
To fix the fee structure, requires deploying the whole system once again and will affect our users so much. We decided to fix the fee structure in our soon-to-be-deployed Definix on Klaytn Chain first because it will not cause any harm to our users. For Definix on BSC, the inherited fee structure will be fixed once we have a major update that requires a major migration from the users.
3. Update all related documents and user interfaces on the topic of the fee structure for Definix on BSC
We updated the information about the fee structure for Definix on BSC in our related documents and user interfaces in order to give users the right picture about the fees when they use Definix on BSC.
Does this issue affect your reward from farming?
No. The number of FINIX that you’ve got from farms and pools is calculated correctly. You can farm and get what you should get without any worries.
Definix is striving for the best
Code without any flaws may sound nearly impossible but Definix is striving to code the best. Although this issue may happen with other PancakeSwap V1-based platforms around the world, when we found it, we tried to find the best solution for our users. Again, big thanks to Inspex, Thailand’s savvy smart contract auditor who informed us so we can make an improvement for Definix and our beloved users.
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