myco-bonding-curve/docs/10-imbalance-fees.md

10: Imbalance Fees (StableSurge)

Source

• Protocol: Balancer V3
• Files: StableSurgeHook.sol, StableSurgeMedianMath.sol
• Repo: balancer/balancer-v3-monorepo

Rationale for MYCO

The bonding surface should incentivize balanced reserve composition. Imbalance fees make it expensive to deposit assets that worsen the reserve balance, and cheap (or free) to deposit scarce assets.

For MYCO:

1. Discourages depositing only the cheapest/most abundant reserve asset
2. Creates economic incentive to maintain target reserve ratios
3. Generates fee revenue for the treasury when users unbalance the reserve
4. Complements reserve tranching (soft incentive vs. hard safety check)

Formula

Imbalance metric:

imbalance = sum(|balance_i - median|) / sum(balance_i)

Surge fee:

if imbalance_after > threshold AND imbalance_after > imbalance_before:
    excess = (imbalance_after - threshold) / (1 - threshold)
    fee = static_fee + (surge_rate - static_fee) * min(excess, 1)
else:
    fee = static_fee

Parameters

Parameter	Default	Effect
static_fee	0.3%	Base fee for balanced operations
surge_fee_rate	5%	Maximum fee for heavily unbalancing operations
threshold	20%	Imbalance level at which surge begins

Implementation

See src/primitives/imbalance_fees.py