Performance Fee Explained

Performance Fee Explained

The performance fee is an essential feature of the ICONOMI platform and its Crypto Strategies.

It brings a much-needed balance to the relationship between the Strategist and their copiers, giving the Strategists an incentive to succeed. We implemented performance fees back in 2018. Since then, the performance fees system has been collecting and distributing fees.

Performance Fee Definition

Performance fees are collected based on the high watermark level. It's a reward that a Strategist gets for making profits through their Crypto Strategy performance.

There are two scenarios when the performance fee is collected:

A) When a copier is still copying the Strategy at the end of the collection period

This part of the fee is allocated on the first Monday of the following month and paid out one month after.
For example, December’s performance fees will be allocated from the Crypto Strategy on the first Monday in January and paid out in February.

B) When a copier sells the Strategy during the collection period

The performance fee is immediately allocated from the Crypto Strategy after a copier sells the Strategy during the collection period. The fee is then paid out by the 10th of the following month.

Collection period

The Collection period is a period during which the performance fee is collected from the copiers. Based on the Strategist's decision, this period can either be weekly, monthly or quarterly.
During these periods, we calculate the Crypto Strategy performance fees based on high watermarks.

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The high-water mark is the highest peak in value that a Crypto strategy or account has reached. This term is often used in the context of Strategist compensation which is performance-based. The high-water mark ensures the Strategist does not get paid for poor performance. If the Strategists loses money over a period, they must get the strategy above the high-water mark before receiving a performance bonus from the assets copying Strategy (ACS).

Allocation

At the end of the collection period, collected fees will be allocated from the Crypto Strategy and prepared for payout/distribution.

A) Performance fee when a copier is still copying the Strategy at the end of the collection period

As explained earlier, the allocation of fees always happens on the first Monday of the following month (for example, performance fees collected in December will be allocated from the Crypto Strategy on the first Monday in January and paid out in February).

B) Performance fee when a copier stops copying the Strategy during the collection period

The fees apply immediately when a copier stops copying the Crypto Strategy.

Payout

The performance fee is distributed and paid out by the 10th of the month.

A) The performance fee collected from copiers who are still copying the Strategy at the end of the collection period is paid out by the 10th of the following month.

B) The performance fee collected from copiers who sold the Crypto Strategy during the collection period is paid out by the 10th of the month.

Note: Crypto Strategy fees are split between ICONOMI, the Crypto Strategy Strategist, and the referrer according to the Referral program (after VAT).

But what does this all mean for me?

Simply put, in case the value of your investment in a Crypto Strategy drops, you will not pay any performance fees until the value of your investment reaches the previous high. In other words, you will not pay any performance fees twice for the same amount of performance.

If you'd like more additional information, check out our Help Center article.

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