Interest refers to a percentage fee charged on loans. Interest fees grow along the life of the loan and are denominated in the loan token. Users should note that interest fees increase the value of debt, and therefore decrease a loan’s collateral to debt ratio over time.
QiDao does not traditionally charge interest on MAI minted.
Repayment fees are a percentage fee charged when the loan is repaid. It does not grow in value over time, so it does not affect a user’s collateral to debt ratio. This fee is denominated in the collateral asset.
Most of QiDao’s CDPs charge 0% interest fees and a 0.5% repayment fee.
Performance fees are a percentage fee charged on the yield earned by collateral. This means that a fee is only charged on the amount that the collateral increases over time. As a result, this fee does not lower a user’s collateral to debt ratio over time.
The percentage of fees are updated at the end of every epoch (Sunday 5pm UTC) in response to the trailing 7-day average yield earned by a vault’s collateral. Different collaterals are charged different performance fees based on risk assessments. Ultimately the fees charged are displayed in the manage vault page.
Certain mai.finance farms have a deposit fee of 0.5%. No withdrawal nor performance fee. Most MAI farms across different chains and dApps are not charged any fees and are operated by partner protocols.
How are fees distributed?
50% of repayment, performance, and interest fees is distributed to Qi lockers, following the passage of QIP 004. The rest of the fees is held by the DAO.