How the 15% performance fee is calculated and charged

1. What is the performance fee?

This is a fee Peccala charges each user on each strategy they invest in, amounting to 15% of the profit we generate for them. 

2. When is the performance fee taken?

The fee is charged at two different points:

  1. Every 6 months that you stay invested in a particular strategy
  2. Any time you redeem any Peccala tokens (whether part of your overall investment, or all of it)

The fee is charged per strategy (i.e. PECH and PECM). So if you have invested in both, there are different fee calculations for each. They may also have different fee dates, if you invested at different times.

3. How is the performance fee calculated?

The fee is calculated separately per strategy, based on two factors:

1) Your current invested balance (B) in USDT 

  • This does not include any USDT you hold in your Peccala account that is not invested

2) The total amount invested (I) over the past 6 months, also in USDT

  • I is set when you make your first investment
  • I is increased every time you invest more: I + new amount invested
  • I is decreased every time you make a redemption, by the percentage of your balance you are redeeming: I * Proportion of your invested balance being redeemed

At the 6 month mark (based on when you first invested in this strategy), we calculate the profit you made, and therefore the15% performance fee due, using the calculation (B - I) * 0.15 = Fee due. The figure for I is then reset to the remaining amount invested, which is known as the high water mark. This high water mark is used as the baseline to calculate the next 6 monthly fee cycle.

The same calculation applies when you make a redemption between the 6 monthly fees, with I being reduced by the % of your invested balance you are redeeming.

The tooltip under Your Portfolio Balance shows real time performance fees due + your next 6 monthly fee date

4. How is the performance fee deducted when I make a redemption?

When you redeem part or all of your investment, the Peccala tokens you are redeeming are burned, and the requisite amount is sent to your Peccala account in USDT.

When that happens, the USDT representing the 15% performance fee are automatically directed to Peccala, along with the other fees indicated when you make the redemption (i.e. gas and redemption fees). You receive the remaining funds.

5. How is the performance fee deducted after 6 months?

When the performance fee is due, the number of Peccala tokens equal to the fee due are deducted directly from your account, and redeemed. Instead of the USDT from the redemption being sent to your Peccala account, they are directed to Peccala.

Because your current balance in the dashboard is displayed net of performance fees, when we charge the fee you won't actually see your USDT balance change. However, the number of tokens in your wallet will drop, and the fee amount shown in the tooltip under 'Your Portfolio Balance' on your dashboard will show that no fee is due, and display the next 6 monthly due date.

6. What happens if I redeem part of my investment?

The calculation is the same as above, but the performance fee is only charged on the percentage of your investment you are redeeming. 

So if you redeem half your tokens, we will charge half the overall performance fee due at that moment. The remaining amount stays invested.

7. What happens if I invest more funds into the same strategy before the 6 month fee date?

The fee is calculated based on the total invested amount in the 6 month period (I), so your additional deposits will automatically be included.

8. What happens if I redeem my entire investment?

We will deploy the same formula as above to calculate the performance fee due, and take it at the time you make the redemption.

If you reinvest in the same strategy again later, the 6 month cycle restarts from the moment you reinvest.

9. What happens if I haven't made a profit?

If no profit has been generated at the time you make a redemption, you won't pay any performance fee.

If no profit has been generated at the 6 month mark, there is also no performance fee due. And because I is not changed, there is no new high water mark. Instead, the high water mark from the previous 6 monthly cycle is retained for the next fee cycle.

The performance fee in different example scenarios:

Example 1 - You invest single amount once and don’t touch it:

  • You invest 1000 USDT in one of our strategies, and don't touch it.
  • At 6 months: your total invested amount (I) is 1000 USDT in this period, and your balance (B) has grown to 1300 USDT through trading performance. We will take 15% of the profit you made... so the calculation is (1300 - 1000) * 0.15 = 45 USDT performance fee. We then reduce I by 45 USDT, so the new high water mark is 1255 USDT for the next cycle.
  • At 12 months: your balance has grown to 2000 USDT. We will take 15% of the profit you made since the last fee was paid... so the calculation is (2000 - 1255) * 0.15 = 111.75 USDT performance fee

Example 2 - You make multiple investments into the same strategy at different times:

  • You invest 1000 USDT in one of our strategies, and after 3 months invest another 1000 USDT.
  • At 6 months: you have invested 2000 USDT total in this period (I). Your Balance (B) has grown to 3500 USDT through trading performance. So the calculation is (3500 - 2000) * 0.15 = USDT 225 performance fee. I is then reduced by 225 USDT.
  • Any additional funds you add after the fee is paid will be added to the new I figure, to calculate the next set of fees.

Example 3 - You make a partial redemption and leave some funds invested:

  • You invest 1000 USDT, and over 3 months it grows to 1500 USDT. You choose to redeem 1000 USDT in month 3.
  • At time of redemption: Your invested amount (I) at the time you make the redemption is 1000 USDT. Your balance (B) is 1500 USDT.
  • You are redeeming 1000 USDT, which represents 66.6% of your Balance, so we use (B - I) * 0.666 to calculate the proportion of the redemption that is profit (333 USDT), and then multiply that amount by 0.15 to calculate the 15% performance fee = 49.95 USDT.
  • Both B and I are then reduced by 66%, and they are then used to calculate any fees due in month 6 (taking the remaining balance + additional growth into account automatically).