Spike-and-Decay Fees

Several core mechanisms in Polaris use spike-and-decay pricing, such as bonding curve swaps, pAsset minting and redemptions, and pETH-to-POLAR conversions. In particular, the first two share the same design but use different parameters, while pETH-to-POLAR conversions use a Dutch auction mechanism.

Each of these mechanisms responds to a different type of market activity, but they all adjust their pricing according to the same market forces. The result is that higher demand for a particular action also increases its cost. As demand fades, that cost gradually decays until the action becomes attractive again.

This allows prices to continuously adapt as market conditions evolve, enabling Polaris to capture more value during periods of higher demand while naturally encouraging activity again as costs decline.

Once deployed, these mechanisms operate in an entirely immutable manner. Unlike parameters such as the conversion rebate, spike-and-decay pricing is not adjusted through stewardship and responds exclusively to market activity. The minimum and maximum fee ranges will be finalized closer to launch.