Performance Fees
Vaults operate on a performance fee system. When the vault generates profit, a portion of that profit is converted into UBXN, divided and transferred to multiple players.
In some, case, we also may have some deposit fees and withdrawal fees. When it's the case, it's mentionned un the app.
The amount of performance fees depends on the vault and is determined in accordance with the algorithm developer's wishes. The % is usually between 10 and 20%.
The performance fees system is intended to be fair and equitable. Thus, fees are only charged when the vault is in profit. In case of a loss, the loss is carried forward to the next trade until the vault is in profit again.
Simplified example
For a vault holding $1,000,000 with performance fees of 10%.
Trade 1 generates a loss of 5%.
- New vault situation at (1*0.95) loss of $50,000
- The vault is worth $950,000.
- No fee is charged.
Trade 2 generates a profit of 3%.
- New vault situation at (10.951.03) 97.85%. Cumulative loss of $21,500
- The vault is $978,500.
- No fee is charged.
Trade 3 generates a profit of 10%.
- New vault situation at (0.9785*1.1) 1.07635, i.e. a profit position of 7.635%.
- The vault represents $1,076,350
- The fees are then deducted from the $76.350, i.e. 10%, $7.635. -> New vault position: $1,068,715.
The counter is then reset to zero.
Trade 4 generates a profit of 2%.
- New vault situation at (1*1.02) +2%, profit of 21.374
- The vault is $1,090,089.
- Fees are taken from the new profit of $21.374, $2.137.4 -> New vault situation: $1,087,952.
Once the fees are collected, they are sent to several addresses. The proportion depends on the % of performance fees of the vault, but as a general rule :
- 25% is sent to the algo developer, to reward him for the profits generated by his algo.
- 25% is sent to the staking pool, rewarding the stakers of UBXN
- 25% is burned
- 25% is sent to SuperBot
Last modified 1mo ago