Crank fees are a charge traders incur to cover the gas costs associated with crank bots' operations. These bots perform essential functions such as liquidations, order triggering, and the execution of funding and borrow fee payments for positions. Crank fees are an integral part of our liquifunding process, designed to settle borrowing and funding fees while adjusting the liquidation margin for positions. This process occurs approximately every 24 hours. However, to maintain the smooth operation of our protocol, we incorporate randomness into the timing of liquifunding events. Thus, the exact moment of liquifunding can slightly vary around once per day.
Crank fees are a fixed cost applied to every action that necessitates some form of crank execution, which includes opening, updating, and, in general, closing positions. While we typically waive the fee on closes, crank fees are still assessed on every liquifunding event. For smaller positions, these fees may constitute a larger portion of the total fees paid.
We recognize that crank fees on Osmosis are currently high and aim to reduce them. Nevertheless, these fees are determined based on congestion-time gas prices to ensure the protocol's decentralization through appropriate incentives. High crank fees during congestion periods ensure that the system continues to operate safely and efficiently, rewarding those who contribute to its operation even in times of high network activity. Our goal is to maintain a balanced system that offers rewards sufficient to incentivize operation, thereby ensuring the protocol's effective and secure function during congestion.