TVL fee

TVL fee explained

The TVL fee is expressed as a percentage of the DTF's Total Value Locked and is applied continuously through a compound interest calculation.

Technical implementation

The TVL fee is implemented using a compound interest formula:

fee = (1 / (1 - feePerSecond))^secondsPassed - 1

Where:

• feePerSecond is set by the DTF Owner (governance)
• secondsPassed represents the time since the last fee calculation

This mechanism ensures that:

• The fee is calculated and accounted for on every user interaction
• Any view functions account for the TVL fee since the last contract update
• The fee accumulates continuously rather than at discrete intervals

Practical implications

For users and integrators, this means:

• The TVL fee effectively acts as a continuous management fee
• The longer assets remain in the DTF, the more fees accrue
• The displayed value of Index DTF tokens will gradually decrease relative to the underlying assets, reflecting the accrued fees