Fees & High-Water Mark

#Plain English

SEAT charges for results and time, never for activity:

• Performance fee — 10%. When a desk's NAV per share rises above the highest level it has ever reached (the high-water mark), 10% of that new profit becomes a fee liability. If the desk loses money, the fee stops until NAV per share fully recovers past its previous peak.
• AUM fee — 2% per year. A small fee accrues continuously on desk equity, prorated by the second.
• No volume fee. Copying ten trades or zero trades costs depositors nothing by itself. This is an explicit design rule of the protocol.

Fees are shared: 70% to the leader, 20% to the protocol, 10% to $SEAT stakers (Phase 2 configuration; Phase 1 vaults run 80/20 with no staker share).

#Technically

All fee math lives in FeeModule (pure functions + owner-set params); liabilities and payouts live in DeskVault.

#Parameters (deploy defaults)

performanceFeeBps ≤ 10000 and protocolShareBps + stakerShareBps ≤ 10000 are enforced in setParams.

#Accrual

_accrueFees() runs at the top of every state-changing vault call (deposit, redeem, executeCopy):

1. AUM: aumFee = equity × 200bps × elapsed / (10_000 × 365 days) is added to feeLiabilitiesUsdg.
2. Performance: if navPerShare > highWaterNavPerShare, the profit (nav − hwm) × totalShares / 10^6 is charged at 10%, and the high-water mark is raised to the post-fee NAV per share.
3. totalAssetsUsdg() always reports equity net of pending (not yet booked) fees, so reads are never ahead of liabilities.

#Payout

_tryPayFees() runs after deposits, redeems and copies:

• The fee split is computed by FeeModule.splitFee: protocol 20%, staker 10%, leader the remainder (70%).
• Payout happens only when the vault holds enough cash; otherwise liabilities wait.
• The staker slice is pushed to the StakingPool via notifyReward. Fail closed: if stakerRecipient is unset, the staker slice is not redirected to anyone — it stays in the vault as an unpaid liability.

#Worked example

Example numbers — not a live desk or forecast. Desk NAV/share rises from a 1.00 high-water mark to 1.10 on 20,000 shares:

• Profit above HWM: 0.10 × 20,000 = 2,000 USDG
• Performance fee: 10% × 2,000 = 200 USDG
• Split: 140 leader, 40 protocol, 20 stakers
• NAV/share after the fee: ≈ 1.09

The AUM fee is deliberately left out of this example; it accrues separately by time.