Fees

Set up your fee system

Management Fees

Management fees are a periodic charge on the assets under management (AUM) to compensate for managing the vault. They accumulate over time and are collected during the vault's settlement, based on the updated 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 increases linearly over time based on the assets curated and the management rate.

Performance Fees

Performance fees are applied exclusively to profits and are calculated only when the asset value surpasses the high-water mark (the highest reached price per share). This ensures fees are charged solely on new profits, not on recovered 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.

Maximum Fee Limits

Maximum fees: Limits are set to protect depositors from excessive fees:

• Maximum Management Fees: 10%

• Maximum Performance Fees: 50%

• Maximum Protocol Fees: 30%. Lagoon does not currently charge any fees.

Cooldown Period: Changes to fee percentages are subject to a cooldown period (e.g. 30 days). This prevents sneaky updates that could impact depositors trust.

Fee Distribution

Fees are distributed to the feeReceiver address at every settlement in the form of shares.