Fee System

Agents on the Ithaca Protocol charge fees for managing user funds and executing trading strategies. This fee system is designed to reward successful agent creators while maintaining transparency for depositors.

Why Are There Fees?

Fees serve as an incentive for creators to:

Develop and maintain effective trading strategies.
Actively manage and improve their agent's performance.
Attract capital by demonstrating success.

A portion of the fees might also support the ongoing development of the Ithaca platform itself.

Types of Fees Explained

Agent creators typically configure two main types of fees:

Management Fee (Ongoing Cost):
- What it is: A small, regular fee calculated as a percentage of the total funds managed by the agent (Assets Under Management or AUM).
- Analogy: Think of it like a small subscription or maintenance fee for the agent's continuous operation and management.
- Impact: This fee is charged periodically, regardless of short-term profit/loss, reflecting the ongoing work involved in running the agent.
Success Fee (Profit Sharing):
- What it is: A percentage charged only on the profits the agent generates for its depositors.
- Alignment: This fee directly links the creator's earnings to the agent's success. If the agent doesn't make a profit, this fee isn't charged.
- Fairness: Success fees are typically calculated using a "High Watermark" principle (see below).

To ensure fairness, the Success Fee usually relies on a concept called the High Watermark (HWM). This means:

Paying for New Performance: An agent creator only earns a success fee when the value of the fund shares reaches a new peak, higher than any previous value.
No Fees for Recovering Losses: If the fund value drops, no success fees are charged until the value recovers past its previous highest point.
Periodic Reset (Optional): In some cases, this "highest point" might be reset after a long period (e.g., quarterly or annually), allowing creators to potentially earn fees on strong performance even if an old all-time high hasn't been surpassed.

This HWM system ensures creators are rewarded for generating real, new value for depositors.

How Fees Are Actually Paid

Importantly, fees are not typically withdrawn directly from the assets (like USDC) you deposited.

Minting New Shares: When fees are due, the agent's smart contract creates (mints) new, tiny fund tokens (shares).
Distribution: These newly minted shares are automatically allocated to the agent creator's address and potentially a platform address.
Impact on Your Share Value: This process slightly increases the total number of shares, meaning the value of each individual share naturally reflects the fund's performance after fees have been accounted for. It keeps incentives aligned without directly touching user deposits.

Setting and Changing Fees

Creator Control: The agent's creator sets the specific fee percentages when launching the agent, within reasonable limits defined by the platform.
Transparency: The fee structure for an agent is publicly visible.
Timelocked Changes: To protect depositors, significant changes to the Management Fee or Success Fee usually require a timelock period. This means the creator must announce the change, and it only takes effect after a set waiting period (e.g., 10 days), giving users advance notice.

This fee system aims to create a balanced ecosystem where successful agent creators are rewarded, and depositors have transparency and protection regarding the costs involved.

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Last updated 11 days ago

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Types of Fees Explained

Agent creators typically configure two main types of fees:

Management Fee (Ongoing Cost):

What it is: A small, regular fee calculated as a percentage of the total funds managed by the agent (Assets Under Management or AUM).
Analogy: Think of it like a small subscription or maintenance fee for the agent's continuous operation and management.
Impact: This fee is charged periodically, regardless of short-term profit/loss, reflecting the ongoing work involved in running the agent.

Success Fee (Profit Sharing):

What it is: A percentage charged only on the profits the agent generates for its depositors.
Alignment: This fee directly links the creator's earnings to the agent's success. If the agent doesn't make a profit, this fee isn't charged.
Fairness: Success fees are typically calculated using a "High Watermark" principle (see below).

Fair Profit Sharing: The High Watermark

To ensure fairness, the Success Fee usually relies on a concept called the High Watermark (HWM). This means:

Paying for New Performance: An agent creator only earns a success fee when the value of the fund shares reaches a new peak, higher than any previous value.

No Fees for Recovering Losses: If the fund value drops, no success fees are charged until the value recovers past its previous highest point.

Periodic Reset (Optional): In some cases, this "highest point" might be reset after a long period (e.g., quarterly or annually), allowing creators to potentially earn fees on strong performance even if an old all-time high hasn't been surpassed.

This HWM system ensures creators are rewarded for generating real, new value for depositors.

How Fees Are Actually Paid

Importantly, fees are not typically withdrawn directly from the assets (like USDC) you deposited.

Minting New Shares: When fees are due, the agent's smart contract creates (mints) new, tiny fund tokens (shares).

Distribution: These newly minted shares are automatically allocated to the agent creator's address and potentially a platform address.

Impact on Your Share Value: This process slightly increases the total number of shares, meaning the value of each individual share naturally reflects the fund's performance after fees have been accounted for. It keeps incentives aligned without directly touching user deposits.

Setting and Changing Fees

Creator Control: The agent's creator sets the specific fee percentages when launching the agent, within reasonable limits defined by the platform.

Transparency: The fee structure for an agent is publicly visible.

Timelocked Changes: To protect depositors, significant changes to the Management Fee or Success Fee usually require a timelock period. This means the creator must announce the change, and it only takes effect after a set waiting period (e.g., 10 days), giving users advance notice.

This fee system aims to create a balanced ecosystem where successful agent creators are rewarded, and depositors have transparency and protection regarding the costs involved.