fee model
Where protocol fees go, why the split is fixed at collection, and what each share is for.
Protocol fees are split at the point of collection into three destinations. The split is set in the contract, so it is a property of the system rather than a policy someone applies afterwards.
The allocation
Draft parameters, subject to change.
| Destination | Share | Purpose |
|---|---|---|
| Protection reserve | 70% | The balance settlements are paid from |
| $HERA buyback | 20% | Buys $HERA on the open market |
| Operations | 10% | Monitoring infrastructure, audits, indexing |
Why the split happens at collection
If fees accumulated in a general account and were distributed later, the reserve's funding would depend on a distribution step — and a step that can be delayed can be skipped. Splitting at collection removes the decision.
It also makes the reserve's growth independently verifiable. The reserve's inflow should equal 70% of fees collected; if it does not, something is wrong and the discrepancy is visible onchain.
The reserve share
70% is the largest share because capacity to pay is the product. A protection protocol whose reserve grows slowly is a protection protocol that cannot settle a real event.
The buyback share
20% buys $HERA on the open market. Because settlements are allocated pro-rata to $HERA holdings, the buyback ties the token to the protocol it funds: protocol usage supports the token, and the token determines a holder's share of the protection the protocol provides.
The buyback is not a yield mechanism and should not be read as one.
The operations share
10% covers what running the protocol actually costs: monitoring infrastructure that has to stay up continuously, indexing, and audits. This share is deliberately small, and it is capped rather than proportional beyond its percentage.
Fee tiers
Draft parameters, subject to change.
Holding $HERA above a published threshold places an address in a fee tier with a reduced protocol fee on covered activity. The structure is fixed; the thresholds and reductions are not yet.
| Tier | $HERA held | Protocol fee |
|---|---|---|
| Standard | Any amount | Base fee |
| Member | Threshold to be published | Reduced |
| Partner | Threshold to be published | Further reduced |
Tiers change only the fee an address pays. They do not change eligibility, the per-event cap, or a holder's pro-rata share, which is always proportional to $HERA held at the event block. Thresholds and reductions will be published here before launch, and the deployed contracts remain the authoritative values.
What can change
The allocation is a draft. If it changes, the change will be published before it takes effect, and the current values are always readable from the deployed contracts listed on Contracts.
What will not change is the structure: a fixed split, applied at collection, with the largest share to the reserve.