Fees

Where the yield comes from, and who pays which fee.

Shores’ yield comes from one place: interest paid by borrowers on loans secured by real property. Owners pay the yield.

These are the planned fees. Final rates are set in each vault’s terms. [TBD: final fee schedule per vault]

Paid by borrowers

Fee	Planned rate	When
Interest	12–14% a year	Paid through the loan as the source of depositor yield
Origination points	[TBD: points]	At funding
Extension fee	[TBD]	If a loan is extended

Charged to the vault (planned)

Fee	Planned rate	Notes
Management fee	0.50–0.75% a year	Charged only on capital deployed in loans
Performance fee	30–50% of returns above the hurdle	Holders receive the first 8.5% a year, tested each quarter at 2.125%, with a high-water mark and no catch-up
Servicing	Cost-plus [TBD: rate]	Pays for loan servicing

Performance fee holdback (planned). Between 25% and 50% of each performance fee is held back and released once a year.

Fee step-down (planned). In any year when depositors’ yield after the full management fee would fall below the hurdle, the management fee is halved.

Where protocol fees go (planned)

Protocol fees are the management fee, the performance fee and origination points. Servicing is paid at cost-plus and stays with Shores.

Destination	Before the TGE	After the TGE (planned)
Shores operating company	85%	60%
Insurance reserve (the vault’s first-loss reserve)	15%	15%
Treasury for SHORES buybacks	0%	25%

Before the TGE there is no token and there are no buybacks. After the TGE, a treasury receives its share of fees and may use it for open-market SHORES buybacks.

Trading shUSD on the secondary market earns Shores no fee.