Protocol Fees

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

Liquidation 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

Loan Origination Fee

There is currently a 0.25% fee on borrowed funds

Performance Fee

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

Farm Maintenance Fee

There is an on-going 2% APR fee to maintain open farm positions, applied to the borrowed value

Future Products

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

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