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8 changes: 7 additions & 1 deletion docs/fassets/2-minting.mdx
Original file line number Diff line number Diff line change
Expand Up @@ -90,7 +90,13 @@ The executor:

## Fees

The following fees are paid to mint FAssets:
These fees are incurred by the **minter** when creating new FAssets:

| Fee Name | Charged In | Status | Purpose |
| :----------------------------------- | :--------------------------------------- | :--------- | :--------------------------------------------------------------------------------------------------- |
| **Collateral Reservation Fee (CRF)** | Native Currency (FLR) | Obligatory | Compensates the Agent and collateral providers for locked collateral time. |
| **Minting Fee** | Underlying Currency (e.g., XRP for FXRP) | Obligatory | The main source of revenue for the Agent and collateral providers. |
| **Executor Fee** | FLR (from CRF remainder) | Optional | Compensates an optional executor who triggers minting execution, saving the minter extra operations. |

### Collateral Reservation Fee

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39 changes: 28 additions & 11 deletions docs/fassets/3-redemption.mdx
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Expand Up @@ -51,6 +51,34 @@ This is the summary of the redemption process:

After the collateral is released, it can either back the minting of more FAssets or be withdrawn.

## Fees

These fees are charged when a user redeems FAssets for the underlying asset:

| Fee Name | Charged In | Status | Purpose |
| :----------------- | :------------------------------------ | :--------- | :---------------------------------------------------------------------------------------------------------------------------- |
| **Redemption Fee** | Underlying Asset (e.g., XRP for FXRP) | Obligatory | Covers the Agent's gas costs for the payment transaction. |
| **Executor Fee** | FLR | Optional | Compensates an optional executor who triggers redemption defaults when agents fail to pay, saving redeemers extra operations. |

### Redemption Fee

The redemption fee is the amount of the underlying asset that the agent retains upon redemption.
This fee is intended solely to cover the agent's transaction fee on the underlying chain, and therefore, it is not shared with the collateral pool.
The fee percentage is defined by governance, is the same for all agents, and is typically smaller than the minting fee.

Governance calculates the percentage so that the fee to redeem one lot pays for a typical transaction fee on the underlying chain.
Therefore, when larger amounts are redeemed at a single address, the agent accrues additional fees because the underlying fee for both small and large transactions is the same.
However, when underlying fees are very high, the agent might still lose funds when a redemption for a small amount, such as one lot, is made.
If this situation occurs frequently, governance will increase the redemption-fee percentage.

### Executor Fee

An optional executor fee can be paid to compensate an executor who triggers a redemption default if the agent fails to pay on the underlying chain.
This spares the redeemer from having to perform extra operations to complete the redemption process.

The executor fee is paid in FLR, and the amount is agreed upon off-chain between the redeemer and the executor.
This fee is only applicable when an executor is involved in the redemption process.

## Redemption-Payment Failure

Agents have a limited time to pay the redeemer on the underlying chain.
Expand Down Expand Up @@ -112,17 +140,6 @@ If neither the redeemer, the agent, nor the executor presents proof of payment o

The procedure to recover this collateral is the same as the procedure in the minting case.

## Redemption Fee

The redemption fee is the amount of the underlying asset that the agent retains upon redemption.
This fee is intended solely to cover the agent's transaction fee on the underlying chain, and therefore, it is not shared with the collateral pool.
The fee percentage is defined by governance, is the same for all agents, and is typically smaller than the minting fee.

Governance calculates the percentage so that the fee to redeem one lot pays for a typical transaction fee on the underlying chain.
Therefore, when larger amounts are redeemed at a single address, the agent accrues additional fees because the underlying fee for both small and large transactions is the same.
However, when underlying fees are very high, the agent might still lose funds when a redemption for a small amount, such as one lot, is made.
If this situation occurs frequently, governance will increase the redemption-fee percentage.

## Self-redemption

Agents can also act as users and redeem FAssets from their own vaults.
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