Our last Treasury update prompted a discussion around the new fee model, and we received a lot of feedback and suggestions from you, our community. The COTI Treasury plays a crucial role in the COTI economy, and as such, we take your feedback very seriously. As promised, we incorporated your feedback into a new structure.
As always, all fees collected will be streamlined into the Treasury and distributed as rewards to its users.
Below is a breakdown of the Treasury’s fee structure:
We have decreased the deposit fee by 50%, from 0.5% per deposit to 0.25%. This will grow adoption.
A lot of you have suggested that the withdrawal fee should consider the number of days that the deposit has been active, along with the deposit’s multiplier. We have listened to you, and that’s exactly what we did.
Up until today, the withdrawal fee was fixed to 0.5%, regardless of the maturity of the deposit or its multiplier. In the new model, the withdrawal fee will be dynamic, and will take into account the duration of the deposit, regardless of the locking period. The longer the deposit is kept in the Treasury, the lower the withdrawal fee will be, going as low as 0.4%. In essence, the locking period will affect the APY, but not the withdrawal fee, that will be affected by the deposit maturity and the deposit’s multiplier only, as illustrated in the graph below:
As an example:
Alex deposits 10,000 $COTI into the Treasury without a multiplier (X1) and after 365 days during which his deposit was active in the Treasury, he decides to withdraw his deposit. According to the current fee model, Alex would have paid a fee of 1% for both the deposit and withdrawal (0.5% + 0.5% fee respectively). However, according to the new fee model, Alex will pay a total fee of 0.65% for both the deposit and withdrawal (0.25% + 0.40% respectively).
Even if Alex had chosen to make a deposit with any of the multiplier factors, his withdrawal fee would have remained as low as 0.4%, as long as his deposit was active throughout the 365 days.
David also deposits 10,000 $COTI into the Treasury, but he decides to add a multiplier of X2, and to lock his deposit for 120 days. After 120 days, his deposit is ‘unlocked’ but he decides to keep it in the Treasury. 365 days after his initial deposit, David now decides to withdraw it. According to the current fee model, David would have paid a fee of 1% for both the deposit and withdrawal (0.5% + 0.5% fee respectively). According to the new fee model, a total fee of 0.65% for both the deposit and withdrawal (0.25% + 0.40% respectively), just like Alex.
The reason why Alex and David both will pay the same fee is because both of them decided to withdraw after 365 days. The withdrawal fee takes into consideration both the length of time that the deposit was active in the Treasury, and the multiplier, regardless of its locking period. However, after 365 days, the withdrawal fee will be 0.4% for all kinds of multipliers.
Top ups and how they affect the withdrawal fees:
For every top up or new deposit, the counter will start counting from the beginning. The top up will reset the counter only for the new transaction and will be calculated from the same date that the top up was added. Thus, the existing transaction will not be affected.
Nicole decides to make a deposit of 1,000 $COTI, with X1 multiplier. After 45 days she decides to top up her deposit with another 500 $COTI. The fee for her first deposit will not be affected by the second transaction. When she decides to withdraw 1,200 $COTI after 60 days, for example, the fee will be calculated as follows: 1,000 $COTI withdrawal fees for 60 days with X1 multiplier, and 200 $COTI withdrawal fees for 15 days and X1 multiplier.
There are no additional Treasury fees on withdrawing rewards, only transaction fees, as with all network transactions.
Multiplier fees are applied on multiplied deposits only (they do not apply for X1 deposits). The amounts are fixed per day, and are as follows:
Deposits with X2 multiplier: 0.0022% / Day
Deposits with X3 multiplier: 0.0027% / Day
Deposits with X4 multiplier: 0.0033% / Day
Deposits with X8 multiplier: 0.0044% / Day
The multiplier fee applies only to the deposit, not to the rewards. The multiplier fee will be collected and paid at the time of withdrawal.
Early withdrawal fee:
The early withdrawal fees are applied on deposits with a locked period only. The early withdrawal fee will remain the same (0%-2%) for users that withdraw their funds before the lock up period ends, as illustrated in the graph below:
Liquidation Risk Fee:
The liquidation risk fee applies only to those who added a multiplier factor to their deposits.
Liquidation risk fees range from 1%-5%, and the amount charged depends on the deposits’ health factor at the time of withdrawal.
X2 multiplier with health factor of 1.3 or below, will result in 1%-3% fees charged.
X3 multiplier with health factor of 1.15 or below, will result in 2%-3% fees charged.
X4 multiplier with health factor of 1.1 or below, will result in 2%-4% fees charged.
X8 multiplier with health factor of 1.04 or below, will result in 3%-5% fees charged.
The liquidation risk fee will be paid at the time of withdrawal.
We believe that this structure is fair, transparent and aligns with the long term perspective we have. Once again, we remind you that all fees collected are being streamlined into the Treasury and distributed as rewards.
The new fee model will take effect starting from January 16th and will affect existing deposits as well.
*Please note that these fees may be subject to changes.
Over the next few weeks, we’ll reveal our plans for 2023 and beyond, including some very exciting updates for the Treasury.
For all of our updates and to join the conversation, be sure to check out our channels:
Technical whitepaper: https://coti.io/files/COTI-technical-whitepaper.pdf