> ## Documentation Index
> Fetch the complete documentation index at: https://docs.defindex.io/llms.txt
> Use this file to discover all available pages before exploring further.

# Partner Fees

Fees are how a partner monetizes a vault. For the layers underneath, and who controls each, see [Understanding DeFindex](/getting-started/index).

## Performance-Based Fee Model

Partner fees in DeFindex follow a simple principle: **fees are only charged on the yield generated, never on the deposited capital**.

### How It Works

* If your vault generates yield, a percentage goes to the partner and DeFindex
* If there's no yield, there are no fees
* Your principal investment is never touched by fees

### Fee Limits

* **Maximum fee**: 90% of generated yield
* **Typical range**: 50%-30% of generated yield

This performance-based model ensures that partners only earn when users earn. There's no incentive to charge fees on idle capital.

***

## Transparency for Users

One of DeFindex's core principles is transparency. When a user sees an APY displayed in their partner's application:

* The APY shown is **already net of all fees**
* Users see exactly what they will receive
* No hidden deductions or surprise charges

### What Users See vs What Happens

| Displayed         | Meaning                                                                            |
| ----------------- | ---------------------------------------------------------------------------------- |
| 15% APY           | User will earn 15% annually on their deposit if the market conditions stays stable |
| Vault performance | Already accounts for partner fees                                                  |
| Balance growth    | Reflects actual returns after all fees                                             |

This approach eliminates confusion. The number users see is the number they get.

***

## Aligned Incentives

The performance-based fee model creates natural alignment between all parties:

### For Partners

* Earn revenue only when users profit
* Incentive to promote well-performing vaults
* No temptation to charge fees on underperforming products

### For Users

* Capital is protected from fees
* Only pay when earning
* Confidence that partners want the same outcome: good returns

### For DeFindex

* Protocol grows when users and partners succeed
* Focus on building better yield strategies
* Sustainable ecosystem development

This alignment means everyone benefits from the same goal: generating real yield for depositors.

***

## Fee Distribution

When yield is generated, fees are distributed completely on-chain:

1. **Yield is generated** by the vault's strategies
2. **Partner fee is calculated** based on their configured percentage
3. **Distribution occurs** when the partner triggers it
4. **Fees are split** between the partner and DeFindex

The split between partner and DeFindex is handled internally by the protocol.

***

<img src="https://mintcdn.com/defindex/ug30IPjHJU5kK9-E/images/fees.png?fit=max&auto=format&n=ug30IPjHJU5kK9-E&q=85&s=b82488b568008d5b6e9619d7c83c0bd0" alt="" width="392" height="444" data-path="images/fees.png" />

***

## Practical Example

Let's walk through a concrete scenario:

### Setup

* User deposits **\$10,000 USDC** through a partner's app
* The vault's strategy generates **15% APY**
* Partner has configured a **50% performance fee**

### After One Year

| Item                                        | Amount  |
| ------------------------------------------- | ------- |
| Gross yield generated before fees (15% APY) | \$1,500 |
| Partner + Defindex fee (50% of yield)       | \$750   |
| Net yield to user                           | \$750   |

### Result

* **User receives**: \$750 in yield (**7.5% net APY**) — passive income with zero effort
* **User's capital**: \$10,000 remains fully protected
* **Partner revenue before Defindex fee**: \$750 annually per user — recurring revenue stream

For a partner with 1,000 active users, this represents **\$750,000 in annual revenue** while providing real value to their users.

***

## Key Takeaways

| Principle             | What It Means                        |
| --------------------- | ------------------------------------ |
| Performance-based     | Fees only on yield, never on capital |
| Net APY display       | Users see what they actually earn    |
| Aligned incentives    | Partners profit when users profit    |
| On-chain distribution | Transparent, on-chain fee handling   |
| Protected principal   | Deposits are never reduced by fees   |

***

## Learn More

* [Understanding APY](/getting-started/understanding-apy) — How APY is calculated and what it means
* [Vault Roles](/getting-started/vault-roles) — Understanding the different roles in vault management
* [Get APY](/integration-guide/vault-operations/get-apy) — How to fetch APY programmatically