> For the complete documentation index, see [llms.txt](https://docs.basis.pro/llms.txt). Markdown versions of documentation pages are available by appending `.md` to page URLs; this page is available as [Markdown](https://docs.basis.pro/economics-and-rewards/performance-fee-mechanics.md).

# Performance Fee Mechanics

{% hint style="info" %}
Operator and jurisdiction: BASIS is operated by BASIS DIGITAL INFRASTRUCTURE LTD, a Seychelles IBC (LEI: [254900IX2F2KCWNSSS64](https://lei.bloomberg.com/leis/view/254900IX2F2KCWNSSS64)).
{% endhint %}

***

## Fee Structure Summary

| Fee Type        |              Rate | When Applied                                             |
| --------------- | ----------------: | -------------------------------------------------------- |
| Performance Fee | 20% of net profit | Deducted before reward distribution to staking positions |
| Management Fee  |                0% | Never charged                                            |
| Deposit Fee     |                0% | Never charged                                            |
| Swap Fee        |             0.01% | On same-token 1:1 conversion                             |
| Withdrawal Fee  |             0.05% | On withdrawal                                            |

{% hint style="success" %}
Supported same-token swaps only:

* BTC → stBTC
* ETH → stETH
* SOL → stSOL
* PAXG → stPAXG

There is no cross-asset swap function.
{% endhint %}

***

## How the Performance Fee Is Calculated

{% hint style="info" %}
$$
\text{Net Yield} = \text{Gross Yield} - \text{Execution Costs}
$$

$$
\text{Performance Fee} = \text{Net Yield} \times 20%
$$

$$
\text{User Distribution} = \text{Net Yield} \times 80%
$$
{% endhint %}

| Component       | Description                                                                                  |
| --------------- | -------------------------------------------------------------------------------------------- |
| Gross Yield     | Funding payments, basis spreads, structural alpha capture, and protocol-native yield sources |
| Execution Costs | Exchange fees, slippage, gas, hedging overhead, and routing costs                            |
| Net Yield       | Yield available for distribution after costs                                                 |

Rewards accumulate in real time as the same stToken in the Staking Wallet.

We apply the performance fee before rewards are credited to staking positions.

***

## Worked Example

{% tabs %}
{% tab title="ETH example" %}
Assumptions:

* User deposits 10 ETH through a connected Web3 wallet
* ETH is swapped 1:1 to stETH
* Position is staked for a 30-day period
* Entry reference value: 30,000 USDT-equivalent
* Gross yield for the period: 600 USDT-equivalent
* Execution costs: 120 USDT-equivalent

| Step                  | Calculation  |             Amount |
| --------------------- | ------------ | -----------------: |
| Gross yield           | 600          |                600 |
| Execution costs       | -120         |               -120 |
| Net yield             | 600 - 120    |                480 |
| Performance fee (20%) | 480 × 20%    |                -96 |
| User receives         | 480 × 80%    |                384 |
| Net return to user    | 384 / 30,000 | 1.28% over 30 days |
| {% endtab %}          |              |                    |

{% tab title="90D booster example" %}
Assumptions:

* Same base conditions as above
* 90-day booster applied
* Booster multiplier: +50%

| Step                          | Calculation | Amount |
| ----------------------------- | ----------- | -----: |
| Base gross yield over 90 days | 600 × 3     |  1,800 |
| Booster-adjusted gross yield  | 1,800 × 1.5 |  2,700 |
| Execution costs               | \~540       |   -540 |
| Net yield                     | 2,700 - 540 |  2,160 |
| Performance fee (20%)         | 2,160 × 20% |   -432 |
| User receives                 | 2,160 × 80% |  1,728 |

{% hint style="warning" %}
Current booster schedule:

* 14D: +10%
* 30D: +20%
* 90D: +50%
* 180D: +100% (2×)

For fixed pools, unstaking is available only after the lock-up period ends. There is no early exit option.
{% endhint %}
{% endtab %}
{% endtabs %}

***

## Why Performance Fees Align Incentives

A performance fee aligns operator economics with realized user outcomes more closely than an asset-based management fee.

| Fee Type        | Operator Earns When                                | User Outcome                                      |
| --------------- | -------------------------------------------------- | ------------------------------------------------- |
| Management fee  | Assets remain deposited, regardless of performance | Operator may earn during flat or negative periods |
| Performance fee | Platform generates positive net yield              | Operator earns only when users earn               |

BASIS charges 0% management fee and 20% performance fee only.

This means:

* If net yield is zero, no performance fee is charged
* If net yield is negative, no performance fee is charged
* Operator compensation depends on positive realized performance, not simply asset growth

{% hint style="info" %}
This model is supported by deterministic execution, mathematical portfolio constraints, and state-machine-based risk controls across the BASIS execution stack.
{% endhint %}

***

## High-Water Mark

A high-water mark means performance fees apply only to new net profits above the previous peak.

If a pool declines below its prior high-water level and later recovers, performance fees are charged only on gains above that previous peak. Recovery back to the earlier level is not charged again.

BASIS applies high-water mark logic on a pool-cycle basis. If positions are rolled across cycles, refer to the relevant pool documentation for cycle reset handling.

***

## Operational Context

{% hint style="info" %}
BASIS combines research from Base58 Labs with proprietary routing and execution infrastructure designed for:

* Sub-50μs latency
* 100K+ OPS throughput
* Deterministic execution quality
* Structural alpha capture under strict risk constraints
  {% endhint %}

These controls are intended to reduce avoidable execution loss and preserve execution precision across staking-related yield strategies.

***

## Related References

* [Fee Calculator](/getting-started/fee-calculator.md)
* [Fees & Limits](https://docs.basis.pro/reference/fees-and-limits)
* [Booster System](/economics-and-rewards/booster-system.md)