> For the complete documentation index, see [llms.txt](https://zeit-1.gitbook.io/zeit/llms.txt). Markdown versions of documentation pages are available by appending `.md` to page URLs; this page is available as [Markdown](https://zeit-1.gitbook.io/zeit/get-started/fees.md). # Fees Fees on ZEIT Vaults 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:**\ \ *The manager gets a cut of **new profits only**—not of your deposits and not of “getting back to even.”*
*** ### 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 #### 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 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.