Fee Structure - Reserve Folio

Overview

Reserve Folio implements a dual-fee system designed to sustain both individual Folios and the broader protocol ecosystem. All fees include a mandatory DAO component that supports protocol development.

Fee Types

Folios support two primary fee mechanisms:

TVL Fee

Continuous fee on assets under managementCharged per second on total Folio value. Manifests as supply inflation, discretely applied once per day.

Max: 10% annually
DAO floor: 15 bps annually

Mint Fee

One-time fee on mintingCharged when users mint new Folio shares. Deducted from shares issued.

Max: 5%
DAO floor: 15 bps

TVL Fee (Time-Based)

A continuous fee on assets under management, charged per second.

How It Works

Accrual: Fee accrues every second based on total supply
Discretization: Applied in full-day increments (every 24 hours)
Supply Inflation: Creates new shares rather than transferring existing ones
Distribution: Split between DAO and fee recipients

Fee Calculation

// TVL fee is stored as per-second rate
tvlFee = annualFee * ONE_OVER_YEAR; // D18{1/s}

// Fee shares calculation
function computeFeeShares(uint256 supply, uint256 elapsed) returns (uint256) {
    // {share} = {share} * D18{1/s} * {s} / D18
    return supply * tvlFee * elapsed / D18;
}

// 2% annual = 0.02e18
folio.setTVLFee(0.02e18);

// Internally stored as per-second rate:
// tvlFee = 0.02e18 * 31709791983 / 1e18
//        = 634195839 (per second)

// For 1M shares over 1 day:
// feeShares = 1_000_000e18 * 634195839 * 86400 / 1e18
//           ≈ 54.79e18 (0.0055% daily)

Setting TVL Fee

Only DEFAULT_ADMIN_ROLE can modify:

/// @param _newFee D18{1} Annual percentage (e.g. 0.02e18 for 2%)
function setTVLFee(uint256 _newFee) external onlyRole(DEFAULT_ADMIN_ROLE)

TVL fees below the DAO fee floor (typically 15 bps) result in 100% of the fee going to the DAO.

Mint Fee (One-Time)

A percentage fee charged when minting new shares.

How It Works

Calculation: Percentage of shares to be minted
Deduction: Fee shares are NOT given to the minter
Distribution: Split between DAO and fee recipients
No Supply Inflation: Total shares minted equals shares parameter

Mint Shares Distribution

When minting with a mint fee:

// User wants to mint 1000 shares with 1% mint fee
totalShares = 1000e18;

// Mint fee calculation (see FolioLib.computeMintFees)
feeShares = totalShares * mintFee / (D18 + mintFee);

// Distribution:
sharesOut = totalShares - feeShares - folioFeeForSelfAmount;
daoFeeShares = daoFee;
feeRecipientShares = feeShares - daoFee - folioFeeForSelfAmount;

The user deposits assets for totalShares but receives fewer due to fees.

Setting Mint Fee

Only DEFAULT_ADMIN_ROLE can modify:

/// @param _newFee D18{1} Percentage (e.g. 0.01e18 for 1%)
function setMintFee(uint256 _newFee) external onlyRole(DEFAULT_ADMIN_ROLE)

// Set 0.5% mint fee
folio.setMintFee(0.005e18);

// When user mints 1000 shares:
// - Fee shares: ~4.975 shares
// - User receives: ~995.025 shares (after all fees)
// - DAO receives: ≥0.746 shares (15 bps minimum)
// - Fee recipients: remainder

DAO Fee Floor

The protocol enforces a minimum fee that goes to the DAO.

Default Floor: 15 bps

By default, the DAO receives at least 15 basis points from all fees:

// If Folio sets TVL fee to 0.15% (15 bps):
// → 100% goes to DAO
// → 0% goes to fee recipients

// If Folio sets TVL fee to 1%:
// → 15 bps goes to DAO
// → 85 bps goes to fee recipients

// If Folio sets TVL fee to 0.10% (below floor):
// → DAO still receives 15 bps worth
// → Fee recipients receive 0

Adjustable Floor

The DAO can adjust the fee floor:

Global Floor

DAO can lower the universal 15 bps floor for all Folios via FolioDAOFeeRegistry.setDefaultFeeFloor().

Per-Folio Floor

DAO can set lower floors for specific Folios via FolioDAOFeeRegistry.setTokenFeeFloor().

The DAO can only lower the fee floor, never raise it above 15 bps without protocol upgrade.

Folio Self Fee

Folios can burn a portion of fee-recipient shares to reduce supply inflation.

How It Works

Instead of distributing all fee-recipient shares, a percentage can be burned:

/// @param _newFee D18{1} Fraction of fee-recipient shares to burn (0 to 1e18)
function setFolioSelfFee(uint256 _newFee) external onlyRole(DEFAULT_ADMIN_ROLE)

// Set 50% of fee-recipient shares to be burned
folio.setFolioSelfFee(0.5e18);

// When fees are distributed:
// - DAO receives: full DAO amount
// - Fee recipients receive: 50% of their amount
// - Burned: 50% of fee-recipient amount

Burning fee shares reduces inflation for all holders, effectively distributing value to existing shareholders.

Fee Recipients

Folios can configure multiple fee recipients with custom allocations.

Fee Recipient Structure

struct FeeRecipient {
    address recipient;  // Address to receive fees
    uint96 portion;     // D18{1} Fraction of total (must sum to 1e18)
}

Configuring Recipients

/// @dev Fee recipients must be unique, sorted by address, and sum to 1e18
function setFeeRecipients(
    FeeRecipient[] calldata _newRecipients
) external onlyRole(DEFAULT_ADMIN_ROLE)

FeeRecipient[] memory recipients = new FeeRecipient[](3);

recipients[0] = FeeRecipient({
    recipient: address(0x123...),
    portion: 0.5e18  // 50%
});

recipients[1] = FeeRecipient({
    recipient: address(0x456...),
    portion: 0.3e18  // 30%
});

recipients[2] = FeeRecipient({
    recipient: address(0x789...),
    portion: 0.2e18  // 20%
});

folio.setFeeRecipients(recipients);

Recipients must:

Be sorted by address (ascending)
Have unique addresses
Have portions that sum to exactly 1e18
Not exceed 64 recipients (MAX_FEE_RECIPIENTS)

Empty Fee Recipients

If no fee recipients are configured:

// Empty array → 100% of fees go to DAO
FeeRecipient[] memory empty = new FeeRecipient[](0);
folio.setFeeRecipients(empty);

Fee Distribution

Fees are distributed when distributeFees() is called or automatically during certain operations.

Manual Distribution

/// Distribute all pending fee shares
function distributeFees() external

Automatic Distribution

Fees are automatically distributed during:

setTVLFee()
setMintFee()
setFolioSelfFee()
setFeeRecipients()

Pending Fee Shares

Fee shares accrue but are not minted until distribution:

/// @return {share} Total pending fee shares (DAO + fee recipients)
function getPendingFeeShares() external view returns (uint256)

/// Includes pending shares in total supply
function totalSupply() public view override returns (uint256)

Pending fee shares are already reflected in totalSupply() even before distribution. This ensures accurate accounting for minting and redemption.

Fee Examples

Example 1: Standard Folio (2% TVL, 0.25% Mint)

Fee Configuration

folio.setTVLFee(0.02e18);    // 2% annual
folio.setMintFee(0.0025e18); // 0.25%

Annual Fees

For a Folio with $10M TVL:

TVL fee: $200,000/year
DAO receives: ≥$15,000 (15 bps minimum)
Fee recipients: ≤$185,000

Mint Fees

User mints $100,000 worth:

Mint fee: $250
DAO receives: ≥$15 (15 bps minimum)
Fee recipients: ≤$235

Example 2: Low-Fee Folio (0.15% TVL, 0.15% Mint)

Fee Configuration

folio.setTVLFee(0.0015e18);  // 0.15% annual
folio.setMintFee(0.0015e18); // 0.15%

Fee Distribution

Both fees are at the DAO floor (15 bps):

100% of all fees go to DAO
Fee recipients receive 0

Example 3: High-Fee Active Folio (5% TVL, 2% Mint)

Fee Configuration

folio.setTVLFee(0.05e18);    // 5% annual
folio.setMintFee(0.02e18);   // 2%
folio.setFolioSelfFee(0.3e18); // Burn 30%

Fee Distribution

For $10M TVL:

TVL fee: $500,000/year
DAO receives: ≥$15,000
Fee recipients: $339,500 (70% of$ 485,000)
Burned: $145,500 (30% of$ 485,000)

Fee Limits

The protocol enforces hard caps on fees:

MAX_TVL_FEE = 0.1e18;   // 10% annually (D18{1/year})
MAX_MINT_FEE = 0.05e18;  // 5% (D18{1})
MAX_FOLIO_FEE = 1e18;    // 100% (D18{1})

Attempting to set fees above these limits will revert the transaction.

DAO Fee Registry

The FolioDAOFeeRegistry contract manages DAO fee configuration.

Key Functions

interface IFolioDAOFeeRegistry {
    /// Get fee details for a Folio
    /// @return recipient DAO fee recipient address
    /// @return feeNumerator Numerator for DAO share calculation
    /// @return feeDenominator Denominator for DAO share calculation  
    /// @return feeFloor Minimum fee floor (D18)
    function getFeeDetails(address folio) external view returns (
        address recipient,
        uint256 feeNumerator,
        uint256 feeDenominator,
        uint256 feeFloor
    );
}

DAO Fee Calculation

The DAO’s share is calculated as:

// DAO share of fee-recipient allocation
daoShare = feeRecipientAmount * feeNumerator / feeDenominator;

// Ensure minimum floor
daoFee = max(daoShare, totalShares * feeFloor / D18);

Best Practices

Setting Appropriate Fees

Consider:

Active vs passive management style
Competitor fee rates
Value provided to holders
DAO minimum requirements

Guidelines:

Passive indices: 0.25% - 1% TVL fee
Active strategies: 1% - 5% TVL fee
Low mint fees (0.1% - 0.5%) encourage usage
Higher mint fees (1% - 5%) for exclusive strategies

Fee Recipient Configuration

Best Practices:

Document recipient purposes transparently
Use multi-sigs for team allocations
Consider time-locked vesting contracts
Review and adjust periodically
Ensure recipients can handle share transfers

Fee Distribution Timing

TVL Fees:

Automatically accrue and apply daily
No manual intervention needed
Consider calling distributeFees() before major announcements

Mint Fees:

Applied immediately on mint
Shares remain pending until distribution
Automatically distributed when fee parameters change

DAO Fee Floor

For New Folios:

Accept 15 bps DAO floor as standard
Set fees above floor to keep some revenue
Request per-Folio floor reduction if needed

For Established Folios:

Build track record before requesting floor reduction
Demonstrate value to ecosystem
Engage with DAO governance

Fee Transparency

All fees are fully transparent and queryable on-chain:

// Current fee configuration
uint256 tvlFee = folio.tvlFee();     // D18{1/s} per-second rate
uint256 mintFee = folio.mintFee();   // D18{1} percentage
uint256 selfFee = folio.folioFeeForSelf(); // D18{1} burn fraction

// Fee recipients
uint256 recipientCount = folio.feeRecipients(0).length;
FeeRecipient memory recipient = folio.feeRecipients(0);

// Pending fees
uint256 pending = folio.getPendingFeeShares();

​Overview

​Fee Types

TVL Fee

Mint Fee

​TVL Fee (Time-Based)

​How It Works

​Fee Calculation

​Setting TVL Fee

​Mint Fee (One-Time)

​How It Works

​Mint Shares Distribution

​Setting Mint Fee

​DAO Fee Floor

​Default Floor: 15 bps

​Adjustable Floor

Global Floor

Per-Folio Floor

​Folio Self Fee

​How It Works

​Fee Recipients

​Fee Recipient Structure

​Configuring Recipients

​Empty Fee Recipients

​Fee Distribution

​Manual Distribution

​Automatic Distribution

​Pending Fee Shares

​Fee Examples

​Example 1: Standard Folio (2% TVL, 0.25% Mint)

​Example 2: Low-Fee Folio (0.15% TVL, 0.15% Mint)

​Example 3: High-Fee Active Folio (5% TVL, 2% Mint)

​Fee Limits

​DAO Fee Registry

​Key Functions

​DAO Fee Calculation

​Best Practices

​Fee Transparency

Overview

Fee Types

TVL Fee (Time-Based)

How It Works

Fee Calculation

Setting TVL Fee

Mint Fee (One-Time)

How It Works

Mint Shares Distribution

Setting Mint Fee

DAO Fee Floor

Default Floor: 15 bps

Adjustable Floor

Folio Self Fee

How It Works

Fee Recipients

Fee Recipient Structure

Configuring Recipients

Empty Fee Recipients

Fee Distribution

Manual Distribution

Automatic Distribution

Pending Fee Shares

Fee Examples

Example 1: Standard Folio (2% TVL, 0.25% Mint)

Example 2: Low-Fee Folio (0.15% TVL, 0.15% Mint)

Example 3: High-Fee Active Folio (5% TVL, 2% Mint)

Fee Limits

DAO Fee Registry

Key Functions

DAO Fee Calculation

Best Practices

Fee Transparency