What is a swap surplus?
A swap surplus is the result of a unique market dynamic known as "positive slippage". In other words, if a token pair's rate changes positively from the time of submitting a transaction to the time of its confirmation, an excess aka "surplus" amount of tokens is returned (relative to the guaranteed amount entered in the swap window).
***Please note: A swap surplus is not a trading fee, and does not occur with every swap.
Where does a surplus amount of tokens end up after a swap is complete?
By direct vote of 1inch Network's 'Instant' Governance system, all swap surplus amounts are distributed in the form of both governance and referral rewards. These proceeds are aggregated and converted into 1INCH tokens, and the ratio for this distribution is decided entirely by the 1inch Network Instant Governance process.
Votes are counted, and the parameter’s value is changed gradually during DecayTime after voting. Stakers can vote or change their vote at any time.