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In order to incentivize deposits into our liquidity pool we always charge a 0.3% fee on all transactions done on SportToken. The funds will be distributed amongst the liquidity providers. In order to protect our liquidity providers we also charge a dyanmic fee based on the users bet amount so that all bets that the SportToken vault takes is in accordance with the famous Kelly Criterion. Dynamic Fees work as such. We operate on a linear fee curve which starts at 0% and ends at 3%. The average fee % we recieved at any given point is the % of our vault we are willing willing to risk on that given event. This leads to the conclusion that we will never risk more than 1.5% of our vault on any given event. Note: Rebates are given out for those who help the vault derisk(See Rebates). Example: Suppose we have 50,000 in our vault. On a football game between the Lions and the Packers, we currently have no money risked meaning the fee point is at 0% on both sides. Alice wants to bet 1000 on side A in an event which is priced at -200. This means that we will need to risk 500 dollars to match Alice’s bet. We calulcate what % of our vault is risked because of Alice’s bet 500/50000 = 1%. Meaning we charge an average of 1%, bringing the total fee to 1.3% to Alice and Alice would need to put ~$1010 to bet 1000 dollars on the Lions. Then the fee piont would shift to 2% on the lions side. Our proof for why this system is always Kelly Opitmal for the vault is below.