# Fees

All fee parameters are encoded in the vault's smart contract and visible before any deposit. The maximums are hardcoded on-chain and can't be overridden by vault operators, so the worst-case fee is always knowable upfront.

## Fee types

**Management fee** Charged on total AUM at each settlement. Accrues linearly: `(assets × rate / BPS) × (timeElapsed / 1 year)`. Capped at 10% annually.

**Performance fee** Applies only to profits above the high-water mark. Calculated as `(pricePerShare - highWaterMark) × totalSupply × rate / BPS`. Capped at 50% on profits above the high-water mark.

**Entry / exit fees** Flat percentage on deposits and withdrawals. Entry is deducted from minted shares, exit from redeemed assets. Capped at 2%. One important detail: rates can only decrease after deployment, they can never be raised.

**Haircut fee** Applies only to synchronous redemptions when that mode is active. Capped at 20%.

**Protocol fee** Lagoon takes a percentage of the fees collected by the vault. Fixed at 10%, with an on-chain cap of 30%.

## Summary

| Fee          | Applied to                    | On-chain cap |
| ------------ | ----------------------------- | ------------ |
| Management   | Total AUM per settlement      | 10% / year   |
| Performance  | Profits above high-water mark | 50%          |
| Entry / Exit | Each deposit or withdrawal    | 2%           |
| Haircut      | Synchronous redemptions       | 20%          |
| Protocol     | Vault fees collected          | 30%          |

***

*Next:* [*Access Control*](/flintrwa-docs/technical-architecture/access-control.md)


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