Fees

Set up your fee system

Lagoon vaults support four types of fees: management, performance, entry/exit and protocol. All fee parameters are encoded directly in the vault's smart contract, visible to any investor before deposit. Fees are collected at each settlement and distributed as shares to the designated feeReceiver address.

Fee type	Charged on	When collected
Management	Total AUM	At each settlement
Performance	New profits above high-water mark	At each settlement
Entry and Exit	New deposit and withdrawal requests	At each settlement
Haircut	Synchronous redemptions	At redemption
Protocol	Vault fees collected	At each settlement

Management Fees

A periodic charge on the total assets under management. It accumulates continuously over time and is collected at each settlement, based on the vault's current valuation.

$$\text{managementFee} = \left( \frac{\text{assets} \times \text{rate}}{\text{BPS}} \right) \times \frac{\text{timeElapsed}}{\text{1 year}}$$

• assets is the total assets being managed.

• rate is the fee rate for 1 year in BPS.

• BPS is a constant representing "Basis Points", 10 000 for percentage conversions (e.g., 1% = 100 BPS).

• timeElapsed is the time period for which the fee is calculated.

The management fee grows linearly over time. The longer the period between settlements, the more fees accumulated. The fee is proportional to the vault's AUM and the annual rate.

Performance Fees

Applied exclusively to new profits, calculated against the high-water mark, the highest price per share the vault has ever reached. This ensures managers are only rewarded for genuine new gains, never for recovering previous losses.

$$\begin{align*} \text{If } \text{pricePerShare} > \text{highWaterMark}: \\ \text{profit} &= (\text{pricePerShare} - \text{highWaterMark}) \times \text{totalSupply} \\[1em] \text{performanceFee} &= \frac{\text{profit} \times \text{rate}}{\text{BPS}} \end{align*}$$

• pricePerShare is the current price per share.

• highWaterMark is the highest price per share reached.

• totalSupply is the total number of shares.

• rate is the performance fee rate (in basis points).

• BPS is a constant representing basis points (10 000).

The performance fee is directly tied to profits and managers are rewarded only for returns exceeding the high-water mark.

Entry and Exit Fees

Flat-percentage fees applied on every deposit and every redemption. Entry fees are deducted from the shares minted to the depositor; exit fees are deducted from the shares used to compute the assets returned to the redeemer. Both are taken in shares and sent to the feeReceiver at settlement, with the protocol cut split off as for any other fee.

$$\text{entryFeeShares} = \frac{\text{grossShares} \times \text{entryRate}}{\text{BPS}}$$

$$\text{exitFeeShares} = \frac{\text{shares} \times \text{exitRate}}{\text{BPS}}$$

• grossShares is the shares amount before deducting the entry fee.

• shares is the amount of shares being redeemed.

• entryRate / exitRate are the fee rates in BPS.

• BPS is a constant representing basis points (10 000).

Both fees apply to both async and sync flows (requestDeposit / syncDeposit for entry, requestRedeem / syncRedeem for exit). For async flows the rate in effect at the moment of settlement is what applies — not the rate at the time the request was submitted — and that rate is frozen on-chain in the settlement data, so users can verify after the fact exactly what fee they paid.

After vault initialization, entryRate and exitRate can only be lowered, never raised. Combined with the 2% hard cap, this means the maximum fee a user can ever pay on entry or exit is fixed when they first interact with the vault.

Protocol fees

Lagoon earns a percentage of the fees collected by the vault. For example, if the vault computes 200 shares for performance and management fees, and the protocol fee rate is 10%, Lagoon receives 10% of the 200 shares, equating to 20 shares.

Maximum Fee Limits

Protocol-enforced caps protect depositors from excessive fees. These limits are hardcoded in the smart contract and cannot be overridden by vault operators.

Management Fee Cap

10%

^{per year, maximum configurable by curator}

Performace Fee Cap

50%

^{on profits above high-water mark}

Entry and Exit Fee Cap

2%

^{on new deposit and withdrawal requests. Rates can only decrease, never increase.}

Haircut Fee Cap

20%

^{on synchronous redemptions}

Protocol

10%

^{fix protocol fee. On-chain limitation set to 30%}

Fee Distribution

At every settlement, the vault mints new shares to represent the fees owed. These shares are sent directly to the feeReceiver address configured at vault creation.

Fees are distributed as shares, not assets. This means the fee receiver participates in the vault's performance from the moment fees are collected, without triggering any asset movement.