Comment on page
How and where the protocol earns revenue
The way fees are collected in Rodeo v1 is that they are deposited straight into the USDC lending pool used for the position (assigned to address(0)) so they earn some of the lending APY until we withdraw.
These funds double as as "protocol reserves" which are used to counter act bad debt as much as possible.
Rodeo currently earns fees in one of two ways:
- 1.Liquidation fee
- 2.Performance fee
If a user's position is liquidated, a percentage goes to a third-party liquidator (usually, a liquidation bot) that liquidated the account. The remainder of the fee goes to the Rodeo Protocol.
The current liquidation fee is 5% of the value of the liquidated position. Of that:
- 50% goes to the liquidator
- 50% goes to Rodeo
When a user withdraws or closes their position, 10% of any profit goes to the Rodeo Protocol. In the future, governance DAO votes may change to modify the fee structure on a farm by farm basis
50% of the protocol profit from performance fees will be directed to users who participate in Rodeo silos by staking the xRDO token
Note: Rodeo does not currently charge any fee on the APY spread between lent and borrowed assets.
As Rodeo launches new layered yield products, such as Index Vaults, Leveraged LSDFi, etc, fees are earned in which a portion is shared with xRDO stakers