> ## Documentation Index
> Fetch the complete documentation index at: https://docs.shores.finance/llms.txt
> Use this file to discover all available pages before exploring further.

# 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.

```mermaid theme={"theme":"github-light"}
flowchart LR
    A["Borrower rate<br/>12–14%"] --> B["Fees, servicing<br/>and reserve"] --> C["Net to stakers<br/>8% target"]
```

<Info>
  These are the planned fees. Final rates are set in each vault's terms. \[TBD: final fee schedule per vault]
</Info>

## 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.


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