Fees
Performance Fee: 12.5% in which 10% for the vault manager, 2.5% for protocol treasury
Management Fee: Set by the Manager (Max: 2.0%)
Exit Fee: Set by the Manager (Max: 1.0%)
Performance Fee
The system implements a performance fee structure to reward managers only when the vault's overall token price exceeds its previous peak, known as the high-water mark. This ensures fees reflect new gains rather than individual investor returns or recoveries from past losses.
High-Water Mark Explained
The high-water mark is the highest net asset value (NAV), expressed as the vault token price, achieved since the last performance fee was minted.
Managers can only claim a performance fee when the current token price surpasses this mark.
This mechanism prevents fees from being collected unless the vault achieves new value highs.
Example:
If an investor sees a 50% return on their deposit but the vault's token price remains below the high-water mark, no performance fees are available. Fees are tied to the vault's collective performance, not individual gains.
When and How Fees Are Triggered
Automatic Minting: Performance fees are calculated and minted automatically during any deposit or withdrawal transaction, but only if the current token price exceeds the high-water mark.
Manager Discretion: Managers may manually mint fees at any time, provided the fee condition is met.
New High-Water Mark: If a fee is minted, the current token price becomes the new high-water mark.
Formula
The number of new vault tokens minted as a performance fee is determined by:
Performance Fee = Max(Current Token Price - Token Price at Last Mint, 0) × Total Token Supply × (Manager Fee Fraction / Current Token Price)
Max Function: If the difference between the current token price and the last mint price is negative (i.e., below the high-water mark), the result is zero, and no fees are minted.
Manager Fee Fraction: Default set at 12.5% total, with 2.5% allocated to the protocol treasury, 10% to the manager.
Example Calculation:
Current Token Price: $25
Token Price at Last Mint: $20
Total Token Supply: 1,000
Manager Fee Fraction: 10%
Fee = Max($25 - $20, 0) × 1,000 × (0.10 / $25) = 5 × 1,000 × 0.004 = 20 new tokens minted.
If the current price were $18 (below $20), the fee would be zero, as the high-water mark isn’t exceeded.
Management Fee
The Management Fee is a recurring charge based on the vault's total assets, compensating managers for ongoing operations and strategy execution.
Purpose: Rewards managers for maintaining and optimizing the vault.
Applicability: Starts when the vault transitions to the LIVE state.
Rate:
Manager-set rate between 0% and 2% annually.
Calculation Frequency: Accrued continuously, calculated based on the time elapsed since the last fee assessment.
Fee Mechanics
Trigger: Fees are calculated and minted when the vault transitions from LIVE to FUNDRAISING or during withdrawals, similar to performance fees.
Token Minting: Like performance fees, management fees are distributed by minting new vault tokens to the manager and protocol treasury, reducing on-chain costs.
Impact: Increases total token supply, slightly diluting share price unless offset by vault growth.
Formula
The number of new vault tokens minted for the management fee is:
Management Fee = (Total Token Supply × Time Change × Management Fee %) / (365 Days)
Total Token Supply: The current number of vault shares.
Time Change: The time elapsed (in seconds) since the last fee calculation, converted to a fraction of a year.
Management Fee %: Manager sets at 2% max.
Example Calculation:
Total Token Supply: 1,000 tokens
Time Change: 30 days (30/365 ≈ 0.08219 years)
Management Fee %: 2%
Fee = (1,000 × 0.08219 × 0.02) / 1 = 1.6438 new tokens minted
Exit Fee
The Exit Fee is an optional charge applied when investors withdraw from the vault, designed to cover operational costs or deter early withdrawals.
Fee Mechanics
Collection: Deducted directly from the withdrawn assets before they are transferred to the investor.
Impact: Reduces the assets received by the withdrawing investor but does not affect the vault’s total share supply directly.
Formula
The exit fee amount is calculated as:
Exit Fee = Withdrawn Assets × Exit Fee %
Withdrawn Assets: The amount of underlying assets being withdrawn.
Exit Fee %: The manager-set rate (0–1%).
Example Calculation:
Withdrawn Assets: 100 USDC
Exit Fee %: 0.8%
Fee = 100 × 0.008 = 0.8 USDC
Investor Receives: 100 - 0.8 = 99.2 USDC
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