Fees & Accounting

When the vault realizes a profit, that profit increases the overall asset value. However, not all of this profit is immediately available for fee collection. A portion is “locked” and gradually becomes available (or “unlocked”) over time. Fees are only charged on new profits that exceed a historical peak—this is known as the high water mark.

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Locked Profit

To prevent sandwich-ing or frontrunning on gains, newly realized profit is initially locked. Over a set duration, this locked profit degrades until it is fully unlocked. The locked profit is calculated as:

$$\text{Locked Profit} = \left(\frac{\text{Degradation Duration} - \text{Time Elapsed}}{\text{Degradation Duration}}\right) \times \text{Previous Locked Profit}$$

Once the degradation period has passed, the locked profit becomes zero.

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High Water Mark

The high water mark represents the highest asset-per-share value the vault has ever reached. Fees are only applied to the profit that exceeds this mark. If the current asset-per-share value is higher than the high water mark, then the eligible profit is determined by the difference:

$$\text{Eligible Profit} = \begin{cases} 0, & \text{if } r_{\text{current}} \leq r_{\text{HWM}} \\ \left(r_{\text{current}} - r_{\text{HWM}}\right) \times \text{Total Shares}, & \text{if } r_{\text{current}} > r_{\text{HWM}} \end{cases}$$

$$\text{Here, } r_{\text{current}} \text{ is the current asset-per-share ratio and } r_{\text{HWM}} \text{ is the high water mark ratio.}$$

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Fee Calculation

Once eligible profit is determined, performance fees are calculated based on a preset fee rate (expressed in basis points). The fee amount is computed as:

$$\text{Fee Amount} = \frac{\text{Eligible Profit} \times \text{Fee Rate (bps)}}{10000}$$

If no eligible profit exists (i.e., the current performance does not exceed the high water mark), no fee is charged.

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Fee Splitting

The calculated fee amount is split between two parties (for example, an admin and a manager). Suppose the admin’s share is defined by aa basis points and the manager’s by mm basis points. The split is determined as follows:

• Admin Share:

$$\text{Admin Share} = \frac{\text{Fee Amount} \times a}{a + m}$$

• Manager Share:

$$\text{Manager Share} = \text{Fee Amount} - \text{Admin Share}$$

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Loss Handling

If the vault incurs a loss, the total asset value is reduced by the loss amount. In this scenario, no performance fee is collected, and the loss directly impacts the vault’s asset value.

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Additional Fee Types

In addition to performance and management fees, Voltr supports:

Issuance Fee

A fee charged when users deposit into the vault. This fee is deducted from the LP tokens minted to the depositor.

$$\text{LP Minted} = \frac{\text{Deposit Amount} \times (10000 - \text{Issuance Fee bps})}{10000} \times \frac{\text{Total LP Supply}}{\text{Total Assets}}$$

Redemption Fee

A fee charged when users withdraw from the vault. This fee is deducted from the assets returned to the withdrawer.

$$\text{Assets Received} = \text{Proportional Assets} \times \frac{(10000 - \text{Redemption Fee bps})}{10000}$$

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SDK Integration

Harvest Accumulated Fees

import { VoltrClient } from "@voltr/vault-sdk";
import { Connection, PublicKey } from "@solana/web3.js";

const connection = new Connection(rpcUrl);
const client = new VoltrClient(connection);

// Harvest fees (can be called by anyone, fees go to designated recipients)
const harvestIx = await client.createHarvestFeeIx({
  harvester: harvesterPubkey,      // Account calling harvest
  vaultManager: vaultManagerPubkey, // Manager fee recipient
  vaultAdmin: vaultAdminPubkey,     // Admin fee recipient
  protocolAdmin: protocolAdminPubkey, // Protocol fee recipient
  vault: vaultPubkey,
});

Calibrate High Water Mark

The admin can calibrate the high water mark to reset the performance fee baseline:

const calibrateIx = await client.createCalibrateHighWaterMarkIx({
  vault: vaultPubkey,
  admin: adminPubkey,
});

Query Fee Information

// Get accumulated admin fees (in LP tokens)
const adminFees = await client.getAccumulatedAdminFeesForVault(vaultPubkey);
console.log("Admin fees:", adminFees.toString());

// Get accumulated manager fees (in LP tokens)
const managerFees = await client.getAccumulatedManagerFeesForVault(vaultPubkey);
console.log("Manager fees:", managerFees.toString());

// Get high water mark information
const hwm = await client.getHighWaterMarkForVault(vaultPubkey);
console.log("Highest asset per LP:", hwm.highestAssetPerLp);
console.log("Last updated:", new Date(hwm.lastUpdatedTs * 1000));

// Get current asset per LP ratio
const assetPerLp = await client.getCurrentAssetPerLpForVault(vaultPubkey);
console.log("Current asset per LP:", assetPerLp);

// Get LP supply breakdown
const lpBreakdown = await client.getVaultLpSupplyBreakdown(vaultPubkey);
console.log("Circulating LP:", lpBreakdown.circulating.toString());
console.log("Unharvested fees:", lpBreakdown.unharvestedFees.toString());
console.log("Unrealised fees:", lpBreakdown.unrealisedFees.toString());
console.log("Total LP:", lpBreakdown.total.toString());

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Summary

• Profit Handling: Profits are added to the total asset value, but a portion remains locked and degrades over time.

• High Water Mark: Only profits that exceed the historical peak (high water mark) are subject to performance fees.

• Fee Calculation: Fees are calculated as a percentage of the eligible profit and then minted as new LP tokens.

• Fee Splitting: Performance and management fees are divided between admin and manager according to predefined shares.

• Issuance Fee: Optional fee on deposits, reduces LP tokens minted.

• Redemption Fee: Optional fee on withdrawals, reduces assets returned.

This approach ensures that fees are only taken on genuine, new gains while protecting investor interests by avoiding fees on previously earned or unrealized profit.