The Hidden Fee Trap 🔍
Here's something I think more DeFi investors should understand.
Two investment vaults can advertise the same 20% performance fee and still produce different outcomes.
Why?
Because the fee calculation matters just as much as the percentage.
Space and Time's latest vault analysis gives a simple example:
A vault uses a $100-per-share high-water mark.
If the applicable share value rises to $110, a 20% performance fee produces a $2 charge per eligible share, assuming no other adjustments.
But if the value stays below $100, that policy produces no performance fee.
Now add investor deposits, withdrawals, share dilution, and changing valuations.
The accounting becomes considerably more complicated.
As ecosystems like $AVAX support increasingly sophisticated DeFi applications, I think independently verifiable calculations will become an important part of investor transparency.
Space and Time's approach is interesting because Proof of SQL can verify supported fee calculations against committed data without requiring every computation to happen inside a smart contract.
The fee policy remains a choice. The arithmetic becomes independently checkable.
#Altcoin Season#
Here's something I think more DeFi investors should understand.
Two investment vaults can advertise the same 20% performance fee and still produce different outcomes.
Why?
Because the fee calculation matters just as much as the percentage.
Space and Time's latest vault analysis gives a simple example:
A vault uses a $100-per-share high-water mark.
If the applicable share value rises to $110, a 20% performance fee produces a $2 charge per eligible share, assuming no other adjustments.
But if the value stays below $100, that policy produces no performance fee.
Now add investor deposits, withdrawals, share dilution, and changing valuations.
The accounting becomes considerably more complicated.
As ecosystems like $AVAX support increasingly sophisticated DeFi applications, I think independently verifiable calculations will become an important part of investor transparency.
Space and Time's approach is interesting because Proof of SQL can verify supported fee calculations against committed data without requiring every computation to happen inside a smart contract.
The fee policy remains a choice. The arithmetic becomes independently checkable.
#Altcoin Season#
