Fee Calculations

Please see below for an example calculation of Teahouse fees, using the Pseudo Market Neutral LP strategy:

Platform fees: 0.1% to enter, 0.2% to exit.

Management fee is 1.7% APY for Teahouse using exit value.

10% performance fee based on profits made.

Assume we start with $1,000 USDC, and the APR is a stable 30%.

Scenario: Invest for 1 week (1 round total)

Funds enter strategy in Round X, after a 0.1% entry fee: 1000 - (1000 * 0.001) = 999. Therefore $999 enter the vault.

Round X+1 begins. User apply to withdraw in Round X+1.

Round X+1 ends and Round X+2 begins. User’s funds exist before Round X+2 begins, deducting performance fees, management fees, and exit fees as calculated below:

Performance fee is 10% of profits made: 999 * 30% APR / 52 * 10%, since funds were in the vault for only one week:

Profits: 999 * 0.3. / 52 = $5.763461. Multiply profits by 10% to get performance fee: $0.576346

Management fees is calculated by multiplying the exit value by 1.7% divided by 52 weeks since funds were in the vault for one week:

(999 + 5.763461) * 0.017 / 52 = 0.328480. Therefore the management fee is $0.328480.

As Round X+1 ends, the user’s funds equals the initial investment minus entry fees plus profits minus performance fees and management fees: 1000 - 1 + 5.7635 - 0.5764 - 0.3285 = $1003.8586.

Upon exiting, an exit fee of 0.2% is assessed, so user ends up with: 1003.8586 - (1003.8586 * 0.002) = $1001.8509.

If exiting after one week, the user will get back $1001.8509 based on assumptions above.

As a comparison, if the user had left the funds in the vault for the entire year (52 rounds), he/she will get back $1283.1095 at the end of one year.

We have provided this spreadsheet for some quick calculations: . https://bit.ly/3zHyz5L