> For the complete documentation index, see [llms.txt](https://docs.pangolin.exchange/llms.txt). Markdown versions of documentation pages are available by appending `.md` to page URLs; this page is available as [Markdown](https://docs.pangolin.exchange/pangolin-overview/introduction-to-pangolin/pangolin-v3/dynamic-fee-mechanism.md). # Dynamic Fee Mechanism Pangolin V3 implements **dynamic trading fees** across all pools, rather than a static fee rate. Fees are **adjusted based on prevailing market conditions**. During times of high volatility or large price swings, the Pangolin Team can increase fees (within set parameters) to compensate LPs for the greater risk of impermanent loss and encourage liquidity stability. Conversely, in stable conditions, fees may decrease to offer traders better rates.\ \ This dynamic fee model aligns fees with liquidity conditions in real time, creating a fairer value exchange between LPs and traders. It ensures optimal trading experiences by charging higher fees during large arbitrage trades (protecting LPs from excessive impermanent loss) and lower fees when markets are calm. Unlike many other concentrated liquidity DEXs that rely on fixed fee tiers, Pangolin V3’s fees are flexible and can **change at any time to reflect market needs**. --- # Agent Instructions This documentation is published with GitBook. GitBook is the documentation platform designed so that both humans and AI agents can read, navigate, and reason over technical content effectively. Learn more at gitbook.com. ## Querying This Documentation If you need additional information that is not directly available in this page, you can query the documentation dynamically by asking a question. Perform an HTTP GET request on the current page URL with the `ask` query parameter, and the optional `goal` query parameter: ``` GET https://docs.pangolin.exchange/pangolin-overview/introduction-to-pangolin/pangolin-v3/dynamic-fee-mechanism.md?ask=&goal= ``` `ask` is the immediate question: it should be specific, self-contained, and written in natural language. `goal` is optional and describes the broader end goal you are ultimately trying to accomplish on behalf of the user. GitBook uses it to tailor the answer towards what is most useful for that goal. The response will contain a direct answer to the question and relevant excerpts and sources from the documentation. Use this mechanism when the answer is not explicitly present in the current page, you need clarification or additional context, or you want to retrieve related documentation sections.