Fee Structure

The Fee Reserve is a dedicated pool where protocol fees are collected and stored. These accumulated fees are crucial for the protocol’s sustainability and will eventually be distributed to the Secured Finance Token Stakers following the Token Generation Event (TGE).

The Fee Reserve is funded through various fees generated by user interactions with the protocol. Below is a breakdown of these fees and how they contribute to the Fee Reserve.

Fee Structure

1. Minting Fee

   • The Minting Fee is charged whenever users mint USDFC by depositing collateral.

   • The fee is calculated as (Base Rate + 0.5%) applied to the minted amount of USDFC.

   • This fee is directed entirely to the Fee Reserve, ensuring that every minting transaction supports the protocol’s sustainability.

2. Redemption Fee

   • The Redemption Fee is applied when users redeem USDFC for Filecoin (FIL) at face value. This fee incentivizes stability within the protocol and provides a mechanism to bring USDFC back to its 1:1 USD peg when necessary.

   • The Redemption Fee is calculated as (Base Rate + 0.5%) of the redeemed USDFC amount.

   • Like the Minting Fee, all proceeds from the Redemption Fee are added to the Fee Reserve.

3. Interest Fee

   • Interest Fee is currently set to 0%. This means that borrowers do not incur any recurring interest costs on their debt, encouraging wider adoption and utility of USDFC.

   • The zero-interest model is strategic, aiming to boost the initial circulation of USDFC within the Filecoin ecosystem. This parameter may be reconsidered in the future based on market conditions.

Post-TGE Distribution

After the Token Generation Event (TGE), the Fee Reserve will be redistributed back to the Secured Finance Token Stakers as a reward. This model aligns incentives, rewarding early supporters and active participants while maintaining the protocol's stability.

Summary of Fee Allocation

Fee Type	Calculation	Destination
Minting Fee	(Base Rate + 0.5%) * Minted USDFC	Fee Reserve
Redemption Fee	(Base Rate + 0.5%) * Redeemed USDFC	Fee Reserve
Interest Fee	0%	N/A