# Fees

This page explains **exactly when fees apply**, **what “High‑Water Mark (HWM)” means**, and **how fees affect your shares.**

***

### TL;DR

* ZEIT vaults currently charge **one fee only**: a **Performance Fee** (a *profit share*) paid to the vault manager.
* **No management fee.**
* **No ZEIT platform fee** (currently).
* The performance fee is charged **only when the vault reaches a new all‑time‑high Price‑Per‑Share (PPS)**.
* If the vault goes down and later recovers, **you don’t pay again** until it breaks the previous high.
* Fees are paid in **vault shares** (the vault mints a small amount of new shares to the manager).

\
**Think of it like this:**\
\
\&#xNAN;*The manager gets a cut of **new profits only**—not of your deposits and not of “getting back to even.”*<br>

***

### What fees exist today?

| Fee type                  | Charged when                                        | Who receives it | How it’s paid                     |
| ------------------------- | --------------------------------------------------- | --------------- | --------------------------------- |
| **Performance Fee (HWM)** | Only on **new profits above the previous peak PPS** | Vault manager   | **Paid in vault shares** (minted) |
| Management fee            | —                                                   | —               | **None**                          |
| Platform fee              | —                                                   | —               | **None (current)**                |

***

### Performance Fee (High‑Water Mark)

#### What is it?

A **performance fee** is a percentage of profits—**only when the vault creates new value**.

Each vault has a **performance fee rate** (example: **20%**). This rate is set by the vault manager and is shown on the vault page.

#### When is it checked?

Fees are evaluated at **fee checkpoints** called **Rolls** (typically around \~24h, depending on vault design).

At each Roll, ZEIT:

1. computes the vault’s **PPS**, and
2. compares it to the **High‑Water Mark (HWM)**.

***

### The 3 definitions you need

#### PPS (Price Per Share)

PPS is the value of one vault share:

> **PPS = NAV ÷ total shares**

Where **NAV** is the vault’s total fair value at the Roll.

#### HWM (High‑Water Mark)

The HWM is the **highest PPS the vault has ever reached at a fee checkpoint**.

In simple terms:

> **HWM = the last “peak” PPS you’ve already paid performance fees on.**

#### Performance fee rate

The percent of **new profits above the HWM** paid to the manager (e.g., **20%**).

***

### The rule (super simple)

At each Roll:

* If **PPS ≤ HWM** → **no performance fee**
* If **PPS > HWM** → performance fee applies **only to the slice above the HWM**

In formula form:

* **Profit above HWM (per share)** = `max(PPS − HWM, 0)`
* **Fee (per share)** = `fee_rate × max(PPS − HWM, 0)`

After the Roll is finalized, the vault updates the HWM to the latest checkpoint PPS.

***

### Examples&#x20;

#### Example 1 — New high → fee applies only to the “new” part

* Fee rate: **20%**
* Old HWM: **1.20**
* New PPS at Roll: **1.25**

Only the gain above 1.20 is counted:

* Profit above HWM = **1.25 − 1.20 = 0.05**
* Fee per share = **20% × 0.05 = 0.01**

✅ The manager fee is **0.01 per share**\
✅ You keep the remaining **0.04 per share** of that new gain\
✅ No fee is charged on anything below **1.20**

***

#### Example 2 — Down → recover → still no fee until a new high

* Fee rate: **20%**
* Old HWM: **1.20**

Timeline:

* PPS drops to **1.00** → **no fee**
* PPS recovers to **1.20** → **still no fee**
* PPS rises to **1.22** → fee applies only to **1.20 → 1.22**

Calculation at 1.22:

* Profit above HWM = **1.22 − 1.20 = 0.02**
* Fee per share = **20% × 0.02 = 0.004**

✅ Manager is **not** paid for recovery back to 1.20\
✅ Manager is paid only for **new highs** above 1.20

***

### How fees are paid: in vault shares (not cash)

When a performance fee is due, ZEIT pays it by minting **new vault shares** to the manager.

What that means for you:

* You keep the **same number of shares**.
* Total shares increase slightly (because the manager receives newly minted shares).
* Your **percentage ownership** of the vault decreases slightly.

{% hint style="info" %}
This is the standard way many funds/LP systems charge performance fees:\
**you don’t send money out—ownership is diluted slightly.**
{% endhint %}

#### Why ZEIT pays fees in shares

Paying in shares:

* keeps the manager aligned (they hold the same vault token and share upside/downside),
* avoids forcing the vault to sell positions just to pay a cash fee,
* keeps accounting clean and visible through PPS + share supply changes.

***

### “Fair PPS” at fee checkpoints&#x20;

Some underlying markets can be thin. A “paper price” (like a mid-price) can overstate what a vault could actually exit for at size.

For Rolls (including fee checkpoints), ZEIT uses **liquidity-aware valuation**:

> PPS is based on what the vault could reasonably realize—**not an optimistic mark that can’t be executed.**

This is intended to:

* avoid charging fees on “fake” gains,
* make fees fair across all holders,
* keep the HWM meaningful.

***

### What you should look at on the vault page

Before depositing, check:

* **Performance Fee rate (HWM)** (e.g., “20%”)
* **Current PPS**
* **HWM PPS** (if shown)
* **Last Roll time** (the last fee checkpoint)

{% hint style="info" %}
Performance fee rates are **set per vault** by the manager and may vary by vault.\
Always use the rate shown on the vault page as the source of truth.
{% endhint %}

***

### FAQ

#### Do I pay fees when the vault is down?

No. If PPS is below the HWM, **no performance fee** is charged.

#### Do I pay fees again when the vault just recovers?

No. Recovering back to the old HWM does **not** trigger fees. Fees resume only on **new highs**.

#### Is this a fee on my deposit?

No. Performance fees apply only to **profits above the HWM**, not deposits.

#### How do fees show up in practice?

Fees show up as a small dilution event at a Roll when a new high is reached (manager receives minted shares). The vault’s accounting reflects this.


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