⛽Fees

Fees are an important part of the platform and have main goals of fraud protection, deflationary pressure and community engagement. Cadabra fees are designed to implement a better and safer solution.

Deposit fees

Strategies have a small deposit fee, usually 0.01% - 0.05%. This fee is needed to counteract potential arbitrage opportunities. At the same time the fee is designed to be low so the earned APY typically offsets the cost within 1-2 days.

The deposit fees are distributed proportionally among all participants who were already part of the strategy prior to the deposit being made.

Performance fees

Each strategy has a performance fee. This fee is taken from profits only. In other words, before rewards are distributed to strategy participants, the performance fee is subtracted and collected in the form of ABRA tokens. It can vary between strategies, but usually hovers around 5%. The fee is collected when compounding is performed.

All ABRA tokens that were accumulated as performance fees are then distributed proportionally among holders.

See also about Swap fees

Gas consumption

Transactions for entering and leaving a strategy costs gas. These gas costs may be significant compared to the gas costs of other DeFi protocols. The high amount of gas used by Cadabra strategies is explained by the complexity of the processes involved in the deposit/redeem operations: a significant portion of the gas costs is attributed to the cost of forming and dissolving LP tokens of active yield sources.

All gas costs associated with rebalance and auto-compounding operations are socialized among the strategy’s users and are already included in the performance fee

Gas socialization refers to the concept of distributing the cost of a transaction among a group of users.

In Cadabra, this is done by performing rebalance and compound operations for all strategy participants in a single transaction. As a result, the gas fee for that transaction is divided among the users, leading to low individual gas costs, benefiting all participants.