Traders: want to keep up to 70% of your clients’ profits?
Why shouldn’t a fund-managing trader profit obscenely from his clients’ success? Those fund managers who get outstanding results for their investors should get rewarded for their skill.
Exceptionally good traders need exceptional motivation to share their strategy with others, certainly more than a mere 10–15% fund manager fee. On Dexe Investment, a fund manager can set her fee at anywhere from 20% to 70%.
How to decide
The short answer is to charge what you’re worth. With Dexe Investment’s easy-to-understand, visual UX, investors will see your returns in real-time and will be tempted to pay you a large fee if your results back up your claim to trading talent.
Of course, maybe you are only starting out on the platform and want to charge a lower fee to attract more investors. Maybe you see someone else on the platform trading the same assets or running a similar strategy and you want to undercut them on price. Or maybe you want to go in the opposite direction and price yourself at a premium.
Thanks to Dexe Investment’s clear stat dashboards, a trader can show off his fund and see what other fund managers are doing. The funds getting the most investor TVL, what fee are they charging on average?
The cashout consideration
Another consideration for the trader/manager when setting the fee is how soon they want to cash out. To protect investors and mitigate risk overall, Dexe Investment has a cooling down period that a manager must wait before withdrawing earned fee income from the fund. The length of the cooling down period depends directly on the size of the fee:
- 20–30% = 1 month cooldown
- 30–50% = 3 months
- 50–70% = 1 year.
This shows the investors that a manager who charges 70% is here for the long-term, sticking around to deliver passive income for hiss investors year-round. It’s yet another layer of trust on the Dexe Investment platform.
Why such a fee structure?
While some platforms make the trader pay a fee, Dexe Investment values the trader’s work and expertise. So only the investors pay a fee, most of which goes to the fund manager. After all, investors only put up money — the trader/manager does all of the hard work of developing a strategy, creating a fund, and making the trades. That’s why the traders need to be incentivized with a good fee on fund profits, which benefits the investors too.
Contrast this to some VCs without a transparent structure. They could give the client an agreed-upon return of only 10–15% while pocketing returns that could be 200%, 300% or more. But on Dexe Investment, the breakdown of profit sharing is as clear as can be.
The 30% consideration
Don’t forget that the platform takes 30% of the trader’s cut to distribute as follows:
- 1\3 to the Insurance Pool for the platform
- 1\3 to the DeXe DAO Treasury
- 1\3 to the DeXe Farming Rewards
This means two things. Firstly, the trader should set his fee with this 30% deduction in mind. Secondly, the fee indirectly (via the deduction) benefits the fund investors (via the Insurance Pool) and DEXE holders (via the Treasury and Farming Rewards).
Therefore, there should be no guilt with setting a higher fee as long as your results back it up. At the end of the day, the system is designed to benefit everyone involved: trader/managers, investors, and DEXE holders.
This kind of everybody-wins setup is at the core of DeFI. Plus, the generous and flexible manager fee structure helps attract the best traders and encourages innovative trading strategies.
Stay tuned!
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