Fees

KAIO Fees.

Overview

KAIO is built to enable a diverse set of configurable fees that are applicable at redemption settlement. In this page the different fees the protocol has are explained, but it must be highlighted that not all fees are active for all instruments, and the applicable fees depend on the configuration of the given instrument. Fees are expressed in basis points (bps), as a percentage of an amount, and are paid for in Settlement Tokens. They are calculated separately in the FeeDeduction.sol library, and then added together for the final overall fee.

Cumulative Redemption

The fees in this category revolve around the amount of security tokens redeemed cumulatively during a period.

Cumulative Redemption Fee

Parameters

CUMULATIVE_REDEMPTION_LIMIT_FEE : Fee percentage applied to amounts over the limit, expressed in basis points.
REDEMPTION_LOOKBACK_PERIOD : Period of time the lookback is done on, expressed in REDEMPTION_LOOKBACK_PERIOD_UNIT.
CUMULATIVE_REDEMPTION_LIMIT_ALLOWANCE : Threshold on cumulative redemptions per each investor, the fee is only paid on amounts exceeding it. Expressed as a percent of maximum aggregated holdings, in basis points (bps).

Explanation

There is an allowance on the amount of redemptions that can be settled cumulatively per each investor, in a given instrument's period. If an investor tries to settled an amount exceeding this allowance, they will be charged a fee on the exceeding amount. The allowance is calculated as a percentage of the maximum aggregated holdings, i.e., the maximum sum of all security token balances of all investors within the redemption lookback period.

Formula

fee = feePercentage * (redemptionAmount - (maxAggregatedHoldings * allowancePercentage))

Example

Worked Example

maxAggregatedHoldings = 500,000

allowancePercentage = 10%

redemptionAmount = 60,000

feePercentage = 5%

fee = 0.05 * (60,000- (500,000 * 0.1))

fee = 0.05 * (60,000 - 50,000)

fee = 0.05 * 10,000

fee = 500

In this example, the maximum aggregated amount of tokens held in the lookback is 500,000, and since the allowance is 10%, the final allowed amount is 50,000. Since the investor is having an order worth 60,000 tokens settled, it exceeds the allowed amount by 10,000, so the fee will be paid on this exceeding amount. The fee percentage is 5%, so the final fee to pay will be of 500 tokens.

Cumulative Redemption Per Investor Fee

Parameters

CUMULATIVE_REDEMPTION_LIMIT_PER_INVESTOR_FEE : Fee percentage applied to amounts over the allowance, expressed in basis points.
CUMULATIVE_REDEMPTION_PERIOD : Period of time the lookback is done on, expressed in CUMULATIVE_REDEMPTION_PERIOD_UNIT.
CUMULATIVE_REDEMPTION_LIMIT_PER_INVESTOR_ALLOWANCE : Threshold on cumulative redemptions per each investor, the fee is only paid on amounts exceeding it. Expressed as a percent of maximum investor holdings, in basis points (bps).

Explanation

There is an allowance on the amount of redemptions that can be settled cumulatively per each investor, in a given instrument's period. If an investor tries to settled an amount exceeding this allowance, they will be charged a fee on the exceeding amount. The allowance is calculated as a percentage of the maximum holdings of that investor, i.e., the maximum security token balance held by the investor within the cumulative redemption period.

Formula

fee = feePercentage * (redemptionAmount - (maxInvestorHoldings * allowancePercentage))

Example

Worked Example

maxInvestorHoldings = 100,000

allowancePercentage = 3%

redemptionAmount = 12,000

feePercentage = 10%

fee = 0.1 * (12,000- (100,000 * 0.03))

fee = 0.1 * (12,000 - 3,000)

fee = 0.1 * 9,000

fee = 900

In this example, the maximum amount of tokens held by the investor in the cumulative redemption period is 100,000, and since the allowance is 3%, the final allowed amount is 3,000. Since the investor is having an order worth 12,000 tokens settled, it exceeds the allowed amount by 9,000, so the fee will be paid on this exceeding amount. The fee percentage is 10%, so the final fee to pay will be of 900 tokens.

Initial Restricted Period

The fees in this category revolve around an initial restricted period. During this period, a particular fee amount is applied, while after it the amount may be reduced or absent.

Initial Redemption Restricted Period Fee

Parameters

INITIAL_REDEMPTION_RESTRICTED_PERIOD : Date until which the restricted period lasts, expressed in a seconds timestamp.
INITIAL_REDEMPTION_RESTRICTED_PERIOD_ALLOWANCE : Threshold on redemptions during the restricted period, the fee is only paid on amounts exceeding it. Expressed as a percent of maximum aggregated holdings, in basis points (bps).
INITIAL_REDEMPTION_RESTRICTED_PERIOD_FEE : Fee percentage applied to amounts over the allowance during the restricted period, expressed in basis points.
POST_REDEMPTION_RESTRICTED_PERIOD_ALLOWANCE : Threshold on redemptions after the restricted period ends, the fee is only paid on amounts exceeding it. Expressed as a percent of maximum aggregated holdings, in basis points (bps).
POST_REDEMPTION_RESTRICTED_PERIOD_FEE : Fee percentage applied to amounts over the allowance after the restricted period ends, expressed in basis points.

Explanation

There is an allowance on the amount of redemptions that can be settled before the initial redemption restricted period ends (a set date after the instrument launch). If an investor tries to settled an amount exceeding this allowance, they will be charged a fee on the exceeding amount. The allowance is calculated as a percentage of the maximum aggregated holdings of all investors since the start of the instrument's period. In a similar way, a different fee percentage can be charged for amounts redeemed after the initial redemption restricted period, on amounts exceeding the post redemption restricted period allowance. This allowance is also calculated as a percentage of the maximum aggregated holdings of all investors since the start of the instrument's period.

Formulas

fee = preFeePercentage * (redemptionAmount - (maxAggregatedHoldings * preAllowancePercentage))

fee = postFeePercentage * (redemptionAmount - (maxAggregatedHoldings * postAllowancePercentage))

Examples

Worked Example 1

maxAggregatedHoldings = 700,000

preAllowancePercentage = 5%

redemptionAmount = 45,000

preFeePercentage = 7%

fee = 0.07 * (45,000- (700,000 * 0.05))

fee = 0.07 * (45,000 - 35,000)

fee = 0.07 * 10,000

fee = 700

In this first example, the initial restricted period has not finished, so the "pre" fee and allowance are used. The maximum aggregated amount of tokens held in the lookback is 700,000, and since the allowance is 5%, the final allowed amount is 35,000. Since the investor is having an order worth 45,000 tokens settled, it exceeds the allowed amount by 10,000, so the fee will be paid on this exceeding amount. The fee percentage is 7%, so the final fee to pay will be of 700 tokens.

Worked Example 2

maxAggregatedHoldings = 1,100,000

postAllowancePercentage = 20%

redemptionAmount = 300,000

postFeePercentage = 0.1%

fee = 0.001 * (300,000- (1,100,000 * 0.2))

fee = 0.001 * (300,000 - 220,000)

fee = 0.001 * 80,000

fee = 80

In this second example, the initial restricted period has ended, so the "post" fee and allowance are used. The maximum aggregated amount of tokens held in the lookback is 1,100,000, and since the allowance is 20%, the final allowed amount is 220,000. Since the investor is having an order worth 300,000 tokens settled, it exceeds the allowed amount by 80,000, so the fee will be paid on this exceeding amount. The fee percentage is 0.1%, so the final fee to pay will be of 80 tokens.

Initial Subscription Restricted Period Fee

Parameters

INITIAL_SUBSCRIPTION_RESTRICTED_PERIOD : Duration of the restricted period, expressed in INITIAL_SUBSCRIPTION_RESTRICTED_PERIOD_UNIT.
INITIAL_SUBSCRIPTION_RESTRICTED_PERIOD_ALLOWANCE : Threshold on redemptions per each investor during the restricted period, the fee is only paid on amounts exceeding it. Expressed as a token amount.
INITIAL_SUBSCRIPTION_RESTRICTED_PERIOD_FEE : Fee percentage applied to amounts over the allowance during the restricted period, expressed in basis points.
POST_SUBSCRIPTION_RESTRICTED_PERIOD_ALLOWANCE : Threshold on redemptions per each investor after the restricted period ends, the fee is only paid on amounts exceeding it. Expressed as a token amount.
POST_SUBSCRIPTION_RESTRICTED_PERIOD_FEE : Fee percentage applied to amounts over the allowance after the restricted period ends, expressed in basis points.

Explanation

There is an allowance on the amount of redemptions that can be settled before the initial subscription restricted period ends. This period starts whenever an investor completes their first subscription, and will reset for future redemptions if their security token balances returns to 0. If an investor tries to settled an amount exceeding this allowance, they will be charged a fee on the exceeding amount. The allowance is given as a set token value. In a similar way, a different fee percentage can be charged for amounts redeemed after the initial subscription restricted period, on amounts exceeding the post subscription restricted period allowance. This allowance is also given as a set token value.

Formulas

fee = preFeePercentage * (redemptionAmount - preAllowance)

fee = postFeePercentage * (redemptionAmount - postAllowance)

Examples

Worked Example 1

preAllowance = 5,000

redemptionAmount = 7,500

preFeePercentage = 25%

fee = 0.25 * (7,500 - 5,000)

fee = 0.25 * 2,500

fee = 625

In this first example, the initial subscription restricted period has not finished for the investor, so the "pre" fee and allowance are used. The allowed amount is 5,000, and since the investor is having an order worth 7,500 tokens settled, it exceeds the allowed amount by 2,500, so the fee will be paid on this exceeding amount. The fee percentage is 25%, so the final fee to pay will be of 625 tokens.

Worked Example 2

postAllowance = 5,000

redemptionAmount = 5,133

postFeePercentage = 0%

fee = 0 * (5,133 - 5,000)

fee = 0 * 133

fee = 0

In this second example, the initial subscription restricted period has already ended for the investor, so the "post" fee and allowance are used. The allowed amount is 5,000, and since the investor is having an order worth 5,133 tokens settled, it exceeds the allowed amount by 133, so the fee will be paid on this exceeding amount. The fee percentage is 0%, so the final fee to pay will be of 0 tokens, meaning no fee is paid.

Redemption Volume

The fees in this category revolve around the amount of security tokens redeemed in relation to the volume of tokens previously held.

Redemption Volume Per Investor Fee

Parameters

REDEMPTION_VOLUME_LIMIT_PER_INVESTOR_FEE : Fee percentage applied to amounts over the limit, expressed in basis points.
REDEMPTION_VOLUME_LIMIT_PER_INVESTOR : Threshold on redemptions for the percentage of the maximum volume of tokens held, the fee is only paid on amounts exceeding it. Expressed in basis points (bps).
REDEMPTION_LOOKBACK_PERIOD : Period of time the lookback is done on, expressed in REDEMPTION_LOOKBACK_PERIOD_UNIT.

Explanation

There is a limit on the amount of redemptions that can be settled cumulatively per each investor, in a given instrument's period. If an investor tries to settled an amount exceeding this limit, they will be charged a fee on the exceeding amount. The limit is calculated as a percentage of the maximum volume of holdings of that investor, i.e., the maximum security token balance held by the investor within the redemption lookback period.

Formula

fee = feePercentage * (redemptionAmount - (maxInvestorVolume * allowancePercentage))

Example

Worked Example

maxInvestorVolume = 13,000

allowancePercentage = 10%

redemptionAmount = 1,900

feePercentage = 7.5%

fee = 0.075 * (1,900- (13,000 * 0.1))

fee = 0.075 * (1,900 - 1,300)

fee = 0.075 * 600

fee = 45

In this example, the maximum volume of tokens held by the investor in the redemption lookback period is 13,000, and since the allowance is 10%, the final allowed amount is 1,300. Since the investor is having an order worth 1,900 tokens settled, it exceeds the allowed amount by 600, so the fee will be paid on this exceeding amount. The fee percentage is 7.5%, so the final fee to pay will be of 45 tokens.

Last updated 3 months ago