Makes sense to split up the proposal. Commenting, therefore, only on the fee allocation not fee structure here.
Broadly agree with the suggested split overall, but wonder if strategists should benefit from some of the managemt fee in exchange for a slightly smaller cut of the performance fee.
A strategist is currently more incentivised to develop niche, high APY strategies even if those attact low AUM (e.g. strategist will make the same from 33m AUM / 30% APY versus 100m AUM / 10% APY). Right now, this isn’t really an issue, indeed it’s a benefit as higher yielding strategies will also generally also attract higher AUM. But, as this space develops and opportunities for high yields decrease, competition is going to turn to how to attract AUM through other means, whether that’s a pretty small boost in APY versus other available offerings, or other more innovative features of vaults such as built-in contract risk coverage. The proposed strategist reward depending on performance only may, therefore, mean that we lose the ability to attract the stragegy talent we need to thrive in the long-term.
Not sure exaclty what numebrs would work best, but as an example something like:
2% annualized management fee
- Nine-tenths (1.8%) to the treasury
- One-tenth (0.2%) to the strategist
20% performance fee
- Six-tenths (12%) to the treasury
- Four-tenths (8%) to the strategist reward
Note that this results in the same stragist reward in the “Example Valut 10,000,000 AUM, 10% APY, after 1 year” but with 20% coming from the management fee and 80% coming from the performance fee.