Fee Management

SmartFunds enable fund managers to charge custom fee structures, or just use the standard "2 and 20" model. During the fund initiation process, fund managers are able to set a "management fee" and "performance fee", mirroring traditional fund fee structures.

When fund managers take fees, the smart contracts charge the fund's investors a number of fund tokens representing net management and performance fees owed, and transfers them from each fund investor's account (general ledger) into the fund's "fee wallet" (balance sheet), a second Ethereum address tied to the fund. Once in the fee wallet, fund managers can redeem the fund token for USDC or keep the collateral in the fund as needed.

SmartFunds fee contracts enforce high-water marks for each investment, ensuring every SmartFund investor's returns are made net of fees as frequently as monthly.

Future releases will have more robust GP fee and expense management functionality.