Yearn v2 comes with a 2% mgmt fees on AUM.
Yearn gov should ramp up mgmt fees slowly as vault’s AUM grow up to the 2% max.
With the introduction of Yearn V2, vaults come with a default 2% mgmt fees on assets under management. This is done at the Vault.vyper code.
While vaults are starting up and first harvests are done, these fees are very aggressive for holders. Yearn gov should ramp up mgmt fees slowly.
For example, it’s been 10 hs since the yvHegic vault was released. Since the vault requires 888k Hegic to do the first investment, holders are affected by mgmt fees without getting any profit.
Vaults should start with 0% mgmt fees and gov should increase 0.5% every $1m AUM up to the max of 2%.
Day 1: yvHegic vault is released with 0% mgmt fees.
Day 2: yvHegic vault grows to $2m AUM, gov increases mgmt fees to 1%
Day 3: yvHegic vault grows to $10m AUM, gov increases mgmt fees to the max of 2%
Added more info so it’s clear the 2% is the max possible.
For: Vaults will start with 0% mgmt fees and gov will raise 0.5% every $1m in AUM
The most simple implementation here would be to set it to 0% on new Vault creation, then increase at 0.5% increments at “reasonable” intervals until it hits 2%. This is only 4 calls by governance and does not require a larger code change.
Yes, I would definitely agree with this—let’s not change the vault code if we don’t have to, especially since we already have 3 v2 vaults deployed in production.
However, I would also wonder if we should instead adjust the limits based on the number of harvest calls? For instance, some of the v1 Curve vaults still don’t have 4 million in AUM, but are still quite profitable. If we set a threshold of harvest calls then we would ensure that we aren’t turning on fees until the vault is profitable, but would also avoid small but profitable (perhaps niche) vaults never paying fees.
Smaller Fund Management Fee. Some smaller funds ($100 million in committed capital and under) may charge a higher management fee of 2.25% or 2.5%, and more considerable funds (over $1 billion in committed capital and over) will charge lower fees, usually around 1.2% to 1.5%.
Large Fund Management Fee. Some large funds are now offering fee and carry options for LPs, such as a choice between a 2% management fee and 20% carry or a 1% management fee and 30% carry. Some LPs prefer the latter (10%/30%) option as they feel it better aligns the interests of the GP and the LPs.
Fee on Called Capital Only. A few funds have offered management fee only on called capital. This is very appealing to LPs as it means the LP pays fees only when the GP is putting the money to work. This has happened in only a few unique circumstances, such as in a follow-on fund (a fund raised to support the investments of an earlier fund that has called most or all of its capital).
Breaks. Some funds offer one-off management fee breaks for “first closing” investors that invest a certain minimum amount. This is meant to incentivize investors to invest early, at the first closing. It’s a tool to build momentum for fundraising.
This proposal needs more information: what benchmark is used in calculating $1mm USD AUM? What counts as ‘AUM’ and what does not?
Instead, a slight modification to the proposal should instead offer the option of proposing such a phased in fee period (time or price based), when the strategy is initially proposed. This also has the benefit of encouraging more ‘day 2’ / ‘operational’ thinking for the strategist