Fees and Funding

Issuance Fees

Issuance fees will be charged to LPs when they decide to stake their capital. The more leverage they deploy the higher Issuance Fee they will be charged. At launch, these fees can be waived or set low at 0.01% - 0.05% per insured protocol.

The exact rates of issuance fees are determined through TIDAL Protocol collective voting and can be adjusted through the proposal system.

Transaction Fees

Transaction Fees are taken as a percentage of the premiums paid by Coverage Buyers who generate cover tokens when providing reserve capital to mutual cover pools.

At launch, the transaction fees will be set to a low rate (to be determined at launch), relative to the total premiums or yields generated by a mutual cover pool. Certain types of pools, such as those covering a brand new DeFi asset or protocol are eligible for a reduced issuance fee schedule.

Redemption Fees

If LPs redeem their reserve capital back prematurely before the natural expiration date of the cover tokens, a redemption fee is charged at a preset percentage depending on how much time has passed, and how much time is left until the natural expiration date of the cover tokens.

This is a way to disincentivize LPs from prematurely withdrawing reserve capital or rapidly switching from one mutual cover pool to another.