Vault management and performance fees: how shares can pay the manager

Use each fee’s own base

With a hypothetical constant 10,000 asset base, a 1% annual management fee corresponds to about 100 over a year before compounding details. A 10% performance fee on 500 of interest corresponds to 50. Ten percent of interest is not ten percent of all deposits.

Actual fees depend on the contract’s accrual timing and formula. These invented rates illustrate the bases only.

Minting a fee is still an economic charge

Suppose, purely to illustrate dilution, a vault has 1,000 assets and 1,000 shares. Minting 10 fee shares with no new assets changes a 100-share holder’s claim from 100 to approximately 99.01 assets. The contract’s exact fee-minting calculation can use different share amounts to deliver a target fee.

The important comparison is assets per share, not whether the original holder’s share count changed.

Check fees during weak performance

The V2 loss guide says management fees can continue during loss periods. Do not assume every fee is paid only from positive profit. Fee authority and timelocks also differ by version: the cited V1 system has performance fees without V2’s management-fee structure.