Costs & Fees
SHRED's fee structure is designed to align incentives between the protocol and its users. There are no deposit fees, no withdrawal fees, and no management fees. Instead, yield is distributed as follows:
~12% APY target from strategy
~10% APY paid to users
~2%+ APY to buffer fund + incentives + costs
This model ensures SHRED remains sustainable, transparent, and aligned with long-term user outcomes.
Deposit fee
0%
No fee to deposit
Withdrawal fee
0%
No fee charged by SHRED
Price impact
Dynamic (~1%+)
Covers strategy entry/exit costs; may include a buffer adjustment. See below for details
Management fee
None
No ongoing percentage taken from deposits
Price Impact
Price impact is a small cost applied to withdrawals that reflects the real expenses of entering and exiting the vault's underlying strategy. It is not a fee collected by SHRED — it covers the actual costs incurred when deploying and unwinding positions across the strategy's execution venues.
Why does price impact exist?
When you deposit USDC, the vault deploys it into a delta-neutral strategy involving spot positions, lending, and perpetual futures. Each of these steps has associated costs: token swaps, trading fees, bridge fees, and spread costs.
Rather than charging these costs upfront, the vault defers them to withdrawal. This means your full deposit is reflected in your balance immediately — and importantly, you begin earning yield on your entire deposit amount from day one. If you deposit 100 USDC, you earn yield on 100 USDC, not on a reduced amount after fees. This design maximises your earning potential from the moment you deposit.
At withdrawal, the price impact is applied to cover both the original cost of entering the strategy and the cost of exiting it.
How is it calculated?
The price impact rate has two components:
Base component — This covers the standard cost of entering and exiting the strategy. It's calculated using a weighted moving average of recent execution costs and typically sits around ~1%. Think of this as the "normal" cost of deploying and unwinding positions in the strategy.
Dynamic component — If the vault's internal safety buffer is below its target level, an additional adjustment increases the price impact. This is normal and expected. It can occur during periods of growth when new deposits haven't yet accumulated sufficient buffer, or during adverse market conditions when the buffer needs additional protection. The dynamic component automatically decreases as the buffer recovers toward its target. It exists to protect the vault's solvency and ensure all depositors are treated fairly.
Key details
Price impact is applied only on withdrawal, never on deposit
The rate is updated periodically and stored on-chain
The rate shown in the app at the time of withdrawal is the rate you pay
What does this mean for your returns?
Your balance grows continuously based on the vault's yield rate. When you withdraw, the price impact is deducted from your withdrawal amount. Under normal market conditions, a few weeks of yield will typically more than offset the base price impact cost. When the dynamic component is elevated, the breakeven period may be longer.
Importantly, an elevated dynamic component only affects you at the moment of withdrawal. If you remain in the vault, your balance continues to grow at the current yield rate with no impact. Once conditions normalise, the dynamic component returns to its base level and withdrawals proceed at the standard rate. If you notice the price impact is above its usual level, it may be worth waiting for it to return to normal before withdrawing.
For more information on how SHRED manages risk, see our Risks page.
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