> ## Documentation Index
> Fetch the complete documentation index at: https://docs.cow.bleu.builders/llms.txt
> Use this file to discover all available pages before exploring further.

# Fee computation for limit orders

> Guidelines for how solvers should compute fees when executing limit orders, where users sign orders with zero fees and solvers propose fees at execution time.

## Background

Unlike market orders (where fees are estimated at quote time), **limit orders** are signed with zero fees. When a limit order becomes executable, the solver proposes a fee to deduct from the order at settlement time. This fee must be fair — it should cover the solver's costs without overcharging the user.

These guidelines derive from the social consensus established in [CIP-11](https://snapshot.org/#/cow.eth/proposal/0x16d8c681d52b24f1ccd854084e07a99fce6a7af1e25fd21ddae6534b411df870) and have been refined through ongoing governance discussions.

## The two principles

Solver-computed fees for limit orders must approximately satisfy two constraints:

### 1. Batch coverage

> The sum of fees of all orders within a batch should cover the execution cost of settling that batch.

If a batch contains multiple orders, the gas cost of the settlement transaction should be distributed across all orders in the batch. A limit order should not be forced to subsidize other orders that are paying very low fees.

### 2. Individual order fairness

> The fee charged to an individual order should cover the execution cost of that order by itself, but not more.

The fee for a limit order should reflect what it would cost to execute that specific order in isolation. Solvers should not use limit orders as a revenue source beyond cost recovery.

## Practical guidance

### Estimating execution cost

When computing fees for a limit order, solvers should estimate:

* **Gas cost**: The gas required to execute the order's swap interactions on-chain, priced at the current gas rate
* **Liquidity cost**: Any adverse price impact from routing through AMMs
* **Revert risk**: A small buffer to account for the probability that the settlement fails

### What counts as "execution cost"

The fee should cover the marginal cost of including the order in a batch:

* Gas for the order's specific AMM interactions
* Gas for transferring tokens to/from the user
* Proportional share of the base settlement transaction overhead

### What is NOT acceptable

* Charging fees that significantly exceed the order's execution cost
* Using limit order fees to subsidize rewards or cover losses from other orders
* Systematically overcharging to accumulate positive slippage

<Warning>
  Violations of fair fee practices are considered potentially slashable offenses under CIP-11's malicious behavior provisions. The protocol monitors fee behavior and systematic overcharging can lead to penalties. See the [competition rules](/cow-protocol/reference/core/auctions/competition-rules#governance) for details.
</Warning>

## How fees interact with rewards

Solver-computed fees are distinct from the [reward mechanism](/cow-protocol/reference/core/auctions/rewards):

* **Fees** compensate the solver for the direct cost of executing the order
* **Rewards** compensate the solver for generating surplus beyond the baseline

A solver should not rely on rewards to cover execution costs, nor should fees be inflated to increase the solver's score in the auction.

## Long-standing limit orders

Limit orders can remain open for extended periods. When a long-standing limit order finally becomes executable:

* The fee should reflect **current** gas prices and market conditions at execution time, not conditions from when the order was created
* If gas prices have increased significantly, a higher fee is justified
* If the order can be batched with other orders sharing liquidity paths, the per-order fee should decrease accordingly

## Related resources

* [Solver rewards](/cow-protocol/reference/core/auctions/rewards) — how rewards work alongside fees
* [Fee model](/cow-protocol/explanation/fee-model) — how fees work from the user's perspective
* [Competition rules](/cow-protocol/reference/core/auctions/competition-rules) — rules governing solver behavior
* [Accounting](/cow-protocol/reference/core/auctions/accounting) — weekly settlement of fees and slippage