When chip traders place predictions by trading chips, they must pay an upfront fee. Upon placing a prediction, this fee is distributed to the corresponding seller and the Waterfall protocol.

The reason for a fee is to prevent situations like the monopoly problem. For example, suppose there was no fee, and 1 user selects an extremely high predict price after purchasing a chip. This would prevent a buyout from ever happening and effectively lock the NFT in the protocol. Similarly, suppose 1 user selects an expiration date extremely far into the future. If the NFT were to drop in demand / value, the NFT would get locked up until the after expiration date (i.e. when the Dutch auction starts). Thus, the fee amount is dependent on both the predict price and expiration date.