# Protocol Revenue & Distribution

The f(x) Protocol generates revenue through multiple mechanisms designed to sustain the system while rewarding participants and long-term supporters.

**1. Revenue Sources**

* Collateral Yields: Earnings derived from the collateral (e.g., stETH) backing the protocol.
* Opening and Closing Fees: Fees collected when users open or close xPOSITIONs, contributing to the protocol's revenue stream.

**2. Revenue Distribution**

All fees and collateral yields are redistributed between the Stability Pool, the xPOSITIONs and sPOSITIONs, and the f(x) Treasury, with the allocation determined by governance.

* Stability Pool: A portion of the revenue supports the Stability Pool, reinforcing system stability and rewarding participants.
* xPOSITIONs and sPOSITIONs: as they are leveraged positions, incentivizing their openings brings significant impacts on fxUSD's peg.
* f(x) Treasury: The remaining revenue is allocated to the Treasury, where a proportion of it is distributed to veFXN holders. This mechanism provides long-term supporters with substantial financial benefits, fostering a robust and engaged community around the protocol.

## Fees Distribution Parameters

### Global

| Fee                           | Distribution                                     |
| ----------------------------- | ------------------------------------------------ |
| fxUSD redemption fee          | 70% to the Stability Pool / 30% Protocol Revenue |
| Stability Pool early exit fee | 100% to the Stability Pool                       |

### ETH xPOSITIONs and fxMINT positions

<table><thead><tr><th width="374">Fee</th><th>Distribution</th></tr></thead><tbody><tr><td>Collateral Yields</td><td>A dynamic percentage based on the shorts debt ratio versus the longs collateral goes to the sPOSITIONs / The rest to the Stability Pool</td></tr><tr><td>xPOSITION and fxMINT opening/closing fees</td><td>70% to the Stability Pool / 30% Protocol Revenue</td></tr><tr><td>Rebalance / Liquidation: 10% of the bounty</td><td>70% to the Stability Pool / 30% Protocol Revenue</td></tr><tr><td>Funding costs (Level I &#x26; II)</td><td>A dynamic percentage based on the shorts debt ratio versus the longs collateral goes to the sPOSITIONs / The rest to the Stability Pool</td></tr><tr><td>Unused Slippage</td><td>50% to the Stability Pool / 50% to the Protocol Revenue</td></tr><tr><td>Aave yields (<a href="https://forum.aladdin.club/t/fip-12-deploy-wsteth-to-aave-protocol/575">FIP-12</a>)</td><td>100% to the Stability Pool</td></tr></tbody></table>

### BTC xPOSITIONs and fxMINT positions

| Fee                                        | Distribution                                                                                                                            |
| ------------------------------------------ | --------------------------------------------------------------------------------------------------------------------------------------- |
| xPOSITION / fxMINT opening/closing fees    | 50% to the Stability Pool / 50% Protocol Revenue                                                                                        |
| Rebalance / Liquidation: 10% of the bounty | 50% to the Stability Pool / 50% Protocol Revenue                                                                                        |
| Funding costs (Level I & II)               | A dynamic percentage based on the shorts debt ratio versus the longs collateral goes to the sPOSITIONs / The rest to the Stability Pool |
| Unused Slippage                            | 50% to the Stability Pool / 50% to the Protocol Revenue                                                                                 |

### BTC & ETH sPOSITIONs

<table><thead><tr><th width="374">Fee</th><th>Distribution</th></tr></thead><tbody><tr><td>sPOSITION opening/closing fees</td><td>100% Protocol Revenue</td></tr><tr><td>Rebalance / Liquidation: 10% of the bounty</td><td>100% Protocol Revenue</td></tr><tr><td>Funding costs (Level III)</td><td>100% to the xPOSITIONs</td></tr><tr><td>Unused Slippage</td><td>100% Protocol Revenue</td></tr></tbody></table>

{% hint style="info" %}
\*The rebate reserve is built to offer a fee rebate in the future 👀
{% endhint %}

Looking at the fee settings? 👉 [Fees](/fx-docs/f-x-protocol-mechanisms/fees.md)

## Protocol Revenue Distribution Parameters

All fees captured by the Treasury are distributed in this way.

|                          |       |
| ------------------------ | ----- |
| veFXN                    | 75%   |
| Treasury Multisig        | 12,5% |
| Reserve / Insurance Fund | 12,5% |

{% hint style="info" %}
The Treasury Multisig allocation helps to sustain the protocol by funding further developments
{% endhint %}


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