# Fees

> The fees a Tango vault can charge, how each one builds up and is paid in shares, the ceilings that cap them, and how the fee splitter divides them.

Source: https://docs.tango.fun/vaults/fees

A Tango vault can charge its holders several kinds of fee. Every fee is paid in vault shares, so fees never compete with withdrawals for the vault's USDC. Each fee also has a **ceiling**, the highest it can ever be set, fixed when the vault is deployed.

> **Key points**
>
> - A vault supports six fees: management, performance, entry, exit, deposit cancellation and redemption cancellation. Release 0.13.0 adds an atomic redemption fee.
> - Every fee is paid in vault shares to the vault's fee splitter. Fees never compete with redemptions for USDC.
> - Each fee has a ceiling fixed at deployment. Raising a fee waits 3 days, and lowering one is immediate.

## Fee types

In the table below, NAV (net asset value) is the total value of everything the vault holds. The **high-water mark** is the highest share price on which a performance fee has been charged.

| Fee | Charged on | How |
| --- | --- | --- |
| Management | The vault's NAV, per year | Builds up every second on NAV, including when the vault loses value |
| Performance | Gains above the high-water mark | A percentage of the rise in share price above the vault's highest settled price |
| Entry | Each deposit | A percentage of the newly minted shares, at settlement |
| Exit | Each redemption | A percentage of the redeemed shares, at settlement |
| Deposit cancellation | Cancelling a pending deposit | A percentage of the USDC still waiting |
| Redemption cancellation | Cancelling a pending redemption within the forced-exit wait | A percentage of the shares still waiting; free after the wait |
| Atomic redemption (0.13.0) | Atomic redemptions only | A percentage of the redeemed shares |

A forced exit pays no fee.

## How fees are paid

Fees build up continuously. The vault subtracts them from NAV as they build up, so the share price always reflects them. It turns them into real shares at every settlement, at every fee-rate change and at a few other events. The contracts call this step **crystallising**.

- The **management fee** is NAV times the rate times the time elapsed, as a fraction of a year.
- The **performance fee** is measured after management fees. If the share price is above the high-water mark, the fee is the rate times the gain times the supply (the number of shares). The mark then rises to the new price. There is one mark for the whole vault, not one per holder.
- The vault pays fees in shares by minting new shares to the fee splitter. This dilutes every holder by the fee amount. No USDC leaves the vault, so fees never compete with redemptions.

The high-water mark starts at the first share price. It can be reset lower at most once a year, as a High-tier change.

## Ceilings

Each fee's ceiling is fixed at deployment and can never be raised. There is also a round-trip ceiling: entry plus exit plus one year of management fees cannot add up to more than it.

Tango's release 0.12.0 vaults deploy with these ceilings:

| Fee | Ceiling |
| --- | --- |
| Management | 2% a year |
| Performance | 20% |
| Entry | 1% |
| Exit | 1% |
| Deposit cancellation | 0.5% |
| Redemption cancellation | 1% |
| Entry + exit + one year of management | 4% |

## Changing a fee

- Raising a fee is a Medium-tier change. It waits 3 days on Tango's production factories, and the fee can only go up to its ceiling. See [Timelocks](https://docs.tango.fun/vaults/timelocks.md).
- Lowering a fee is immediate.
- Fee changes are never back-dated. Before any change, the vault turns the fees built up so far into shares at the old rate. A new rate never applies to time that has already passed.

## The fee splitter

Every vault sends its fees to its own **fee splitter**, a contract that divides them between recipients in this order:

1. A part of every fee inflow goes to the platform first. The contract caps this platform fee at 5%. It is 0% on Tango's vaults today.
2. Next come any secondary beneficiaries, which are optional extra recipients. Together, they are capped at a share fixed at deployment, which is 20% on Tango's factories.
3. Everything left goes to the primary recipient.

Anyone can trigger a payout. Before the split changes, the fees built up so far are turned into shares and paid out under the old split.

## Other costs

Vault fees are not the only costs. Swaps pay pool fees and slippage, bridges and venues charge their own fees, and transactions cost gas. In the Tango app, these costs are shown where a creator or depositor makes a decision. See [Fees in the app](https://docs.tango.fun/app/fees.md).