[Discussion] Fee Structure Overhaul


Replace the existing fee structure with a single, universal fee. This prevents users from ever earning negative returns.


The Vesper revenue framework was built using market data from competitors at the time and analyzing the user psychology of different fee models. As the market has changed substantially since inception, our fee model is now outdated, and seen as inferior to others.

This proposal sunsets the existing model (0.6% withdrawal fee, 20% performance fee) and introduces a universal fee.

The universal fee is straightforward: Vesper will charge a 2% fee on principal, collected from realized earnings on the pool at each rebalance. If that 2% reflects more than 50% of yield earned, Vesper will only take 50% of yield.

In other words, we charge 50% under 4% APY, and 2% of principal at-or-above 4%.

This model was determined by analyzing competitors and modeling APY and revenue to both protocol and end user.


This fee model is also unique from other options in its ease of implementation. The universal fee, while assigned based on principle, does not touch the deposits of user funds, only the yield earned.

The management fee is added to the rebalance logic module, and looks like an additive, dynamic fee on yield earned versus deposits. It works as follows:

Yield Earned is assigned at rebalance. Then…\

Fee = 2% * ( blocks since last rebalance / blocks per year ) * TVL

If (fee > Yield Earned * 50%)

  • Fee = Yield Earned * 50%

User APY = Yield Earned - Fee

Protocol Revenue = Fee


Base APY End User APY (Vesper) End User APY (Yearn)
1% 0.5% 0%
2% 1% 0%
3% 1.5% 0.4%
5% 3% 2%
8% 6% 4.4%
13% 11% 8.4%
21% 19% 14.8%


All pools’ withdrawal/deposit fees are set to 0%. Rebalance logic modified to account for a universal fee. This fee is set at 2% of management or 50% of performance, whichever is lower.

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Proposal here: Fee Structure Overhaul · Issue #46 · vesperfi/doc · GitHub

I’ve been posting on this over in Discord.

Basically, this fee structure is preferable to the old one, but from my perspective as an individual depositor, the effective fee rate is way too high.

My understanding is that our fee structure is tailored to institutional/protocol level buy-in because that’s where most of the TVL is. If it’s desirable for this audience, then it’ll be a success.

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This is the VIP we’ve all been waiting for. Removing the withdrawal fee will make Vesper an attractive integration point for other protocols to earn yield, and to park protocol treasuries.

Huge props to @Mudokan who has spent a lot of his time, energy, and social capital advocating for this change, and the Vesper team for making it happen.

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Absolutely. If this is what is appealing to our target audience then I am all for the overhaul.

Also props to Mudo for pushing this commentary to the community.

Great seeing these VIPs pushed before end of month too!

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I’m all for this VIP if it makes it easier to draw it other protocols and institutions, which it seems like it will. I like the shift Vesper is making to align more with protocols and institutions and not relying on income from withdrawals. More sustainable this way.

Not sure if it’ll bring in retail at all. The removal of the withdrawal fee is a plus for retail, but the downside is list APYs may be lower which is a negative for retail.

Overall, it’s a net zero for retail users, net plus for other protocols and institutions and net plus for Vesper itself.

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Hello! I am Nomad, a core developer at Alchemix.

The removal of withdrawal fees and assuring that fees cannot exceed profits will enable us to integrate Vesper into Alchemix V2. We think when compared to Yearn, this fee is very low and reasonable which is great!

If this proposal passes we expect around a 2 week turnaround time to get a beta out for Vesper pools.


100% agree. Vesper should have adopted this last year to make the product more composable with other defi products out there waiting to leverage it. But I am glad this is being considered now.

I am all for it. I believe it better aligns with what our target audience desires as witnessed by Nomad’s reply. As an aside, I met Ted Ligety in Park City today and I believe and hope his personal story matches Vesper’s maturation process. As a high school student, Ted was “getting his ass kicked” in competition. He was the fourth best ski racer on his team. He believes that this made him try new things and work harder than the others. Progress came slowly and then all of a sudden. He turned his hard work and trying new things into two Olympic gold medals and 5 world championships. I am hoping that this is what we are experiencing with Vesper. Progress has been slow but hopefully through diligence, hard work, and trying new things success will come suddenly.

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I like.to propose an amendment that if protocol APY is not generating greater than 1.5% or 2% then fee is not charged. Incentive for protocol and our community to replace non performing strategies. We can advertise that vesper only charge fees if we perform to our expectations

Seems like a reasonable idea. If the apy is super low it wont attract anyone to the pool. At the risk of complication a lower apy for very low apy pools May be warranted. 50 percent on . 12 percent for conservative eth pool right now. Is it really worth it to deposit into a pool for a measly .06 percent? Perhaps we should only have a 25 percent margin or lower on these low apy pools. Or even as kow as 10 percent.

I’d like to see a more compelling fee structure to retain retail users and coerce more capital from large depositors at Yearn. Sacrifice some short term revenue to be more aggressive with capturing TVL and slash the proposed fees to 50% at up to 2% or 1% APY, whichever is less.

The way I look at it is we’re not compelling anyone even at 0% fees at this point. We do have better yield opportunities on conservative pools, though they are on the old pool version and require some additional deployments - we’ve deprioritized while focusing on other deployments and buildouts (but will get back to it).

I don’t think we should strive towards 4% as our benchmark, either. Whether users are getting 2% or 3% APY is a non-starter in both cases. APY has historically been at all-time lows and is improving considerably. Frontend unfortunately is a 30-day trailing average and doesn’t yet reflect that all of our pools are doing considerably better than they were the past 1-2 months. Our Avalanche pools are all beating the 4% benchmark as well (this is not surfaced, either). Also recognize that the apy surfaced in app is after fees.

I do understand the notion that we want to be fair to users but I think this distracts as a symptom of the bigger problem which is low APY doesn’t play.