πŸ’ΈProtocol fees

Our protocol differentiates between 2 different fees that generate revenue for the Protocol:

Upfront Perpy Fees

  • Fee Structure: Perpy takes a 0.5% fee on the size of collateral committed when opening a trade.

    This fee is fully used to Buy Back and Burn the $PRY token for the moment.

    This fee can be discounted by half depending on the number of xPRY stake by the trader. See table below.

xPRYDiscount

β‰₯ 500

3.0%

β‰₯ 2500

5.0%

β‰₯ 10 000

7.5%

β‰₯ 25 000

10.0%

β‰₯ 50 000

15.0%

β‰₯ 100 000

20.0%

β‰₯ 250 000

25.0%

β‰₯ 500 000

30.0%

β‰₯ 1 000 000

35.0%

β‰₯ 2 000 000

40.0%

β‰₯ 5 000 000

45.0%

β‰₯ 10 000 000

50.0%

Perfomance fees

Traders can set performance fees for their trading vault within a range of 0% to 50%

Performance fees are calculated in two different ways depending on whether the vault is SPOT or PERP

Performances fees for PERP Vaults

  • Fee Structure: A performance fee is implemented for every trade closed in profit.

  • Protocol's Share: For every trade closed at a profit, the protocol takes a 20% share of the performance fees, which are fully redistributed to xPRY stakers. If the performance fees are set to 0%, the protocol will still apply a 2% fee on successful trades.

Example of Performance Fees Distribution for PERP Vault

:

Imagine a trading vault created by a trader with a Total Value Locked (TVL) of $100,000. The funds in the vault are split between the trader's deposit of $20,000 and investors' deposits totaling $80,000.

The trader has set the performance fees at 20%. This means that when a trade is closed with a profit, 20% of the profits will be distributed to the trader and the $PRY stakers as follows:

  • 20% to $PRY stakers.

  • 80% to the trader.

The remaining 80% of the profits are distributed to the investors.

Now, let's break down the distribution of profits after a successful trade closed at 100% profit:

  1. Trader's Share: Since the trader owns 20% of the vault, they receive 20% of the profits ($20,000) without any fees, as no fees are taken from the vault manager's funds.

  2. Investors' Share: The remaining $80,000 of the profits are distributed as follows:

    • Investors (80%): $64,000 is distributed to the investors, based on their respective shares in the vault.

    • Performance Fees (set by the trader at 20%):

      • Trader: $12,800 (80% of the performance fees) goes to the trader.

      • PRY Stakers: $3,200 (20% of the performance fees) is distributed to PRY stakers.

This example illustrates the transparent and fair distribution of profits within Perpy's protocol, ensuring that traders, investors, and PRY stakers alike benefit from successful trades.

Performances fees for SPOT Vaults

Performance fees on spot vaults operate under the High Water Mark mechanism. This mean that performance fees are only charged on new profits generated beyond the highest previous value of the investment.

Example of Performance Fees Distribution for SPOT Vaults:

Let's imagine that investors deposit a total of $1000 into a vault. The trader of the vault manages to multiply the funds by 4, resulting in $3000 in profits. Out of these $3000 in profit, a 20% performance fee is charged, totaling $600. Of this $600, 80% goes to the trader (the vault manager), which is $480, and 20% will be distributed to $xPRY stakers, amounting to $120.

Subsequently, let's imagine that the trader makes some bad trades and divides the funds by 4, bringing the value of the investors' funds back to $1000. Then, the trader makes a x3 return. On this new gain, no performance fees will be applied because it was not realized above the previous high.

Fee Discounts for xPRY holders :

These fee reductions apply to the trader's share of performance fees sent to the Protocol.

xPRYDiscount

β‰₯ 500

3.0%

β‰₯ 2500

5.0%

β‰₯ 10 000

7.5%

β‰₯ 25 000

10.0%

β‰₯ 50 000

15.0%

β‰₯ 100 000

20.0%

β‰₯ 250 000

25.0%

β‰₯ 500 000

30.0%

β‰₯ 1 000 000

35.0%

β‰₯ 2 000 000

40.0%

β‰₯ 5 000 000

45.0%

β‰₯ 10 000 000

50.0%

Mangement Fees

During the vault creation process, vault managers can opt-in for a management fee ranging from 1% to 5% on their vault. This translates to an annual fee of 1%-5% on the total Assets Under Management (AUM).

From these collected fees, the protocol will take a 50% cut to buy back $PRY tokens from the market and then burn them.

For instance, for a vault with a 4% management fee:

Let's consider that a vault sustains an average AUM of $1 million throughout the year. From this amount, $40,000 will be deducted from the vault, $20,000 allocated to the trader and the remaining $20,000 used by the protocol to buy back and burn $PRY tokens reducing the total supply

Fee discounts for Pepey holders

If you hold 1 NFT, you have 1 additional level of reduction on the table above.

The fee reductions for PRY tokens and Pepey NFTs are cumulative.

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