Performance fee mechanics

How strategy performance becomes your earnings.

The headline:

Performance fee accrues only on gains above the high water mark. Crystallises at scheduled events (monthly, per your agreement). Equalisation accounting means each investor pays based on their own entry NAV, not the strategy aggregate.

Rate: typically 30% on gains above high water mark per share, multiplied by share count.

High water mark:

The highest NAV per share recorded at a crystallisation event in the vault's history.

It doesn't reset when the vault is below it. It only resets upward.

If crystallisation events have occurred at NAV $1.00, $1.10, and $1.08, the high water mark is $1.10.

Shadow accrual:

Between crystallisation events, performance fees accrue in shadow form, calculated daily, not yet earned.

At each NAV update, the oracle calculates per-share gain above high water mark, multiplies by share count, applies the fee rate (typically 30%). This shows on your dashboard as "accrued performance fee, not yet crystallised."

If NAV falls back below the high water mark, shadow accrual decreases. It can go to zero.

Crystallisation:

At the scheduled event, the platform snapshots NAV per share. If above the high water mark, the performance fee crystallises. The high water mark resets to the snapshot NAV.

If at or below, nothing crystallises. The high water mark stays.

Equalisation:

Performance fees are calculated per-allocator based on each one's entry NAV.

Example: Vault NAV is $1.10 (high water mark = $1.10). A new investor allocates at $1.10. The vault grows to $1.20 before crystallisation. That new owner's performance fee is on the $0.10 gain from their $1.10 entry, not on the $0.20 from the original $1.00 starting NAV.

Investors don't pay performance fees on gains that happened before they arrived. The platform handles equalisation automatically; each owner's personal high water mark is recorded at allocation.

Crystallisation cadence:

Performance fees crystallise monthly, aligned with the monthly redemption window. There is no mid-month crystallisation and no mid-month redemption.

What happens at crystallisation, in order:

1. Oracle calculates NAV per share
2. Platform compares to each investor's personal high water mark
3. For each owner where NAV exceeds their mark, performance fee is calculated
4. Fees transfer from vault to fee escrow
5. Your performance fee settles to your wallet, less MakeBanc's payment processing fee
6. Each owner's personal high water mark resets (if NAV exceeded it)
7. The vault's public high water mark resets if a new vault-level high was reached

Worked example:

Pro tier. Monthly crystallisation. 30% performance fee.

Start of month: NAV $1.05. High water mark $1.05. Share count 10 million.

End of month: NAV $1.08. Gain above HWM: $0.03/share.

Aggregate gain: $0.03 x 10m = $300,000. Performance fee at 30%: $90,000.

MakeBanc charges a payment processing fee on that $90,000, set by your tier. The remainder settles to your wallet.

High water mark resets from $1.05 to $1.08.

What you don't see:

Your trades. The platform displays performance, not trade-level activity. Your trade IP is yours.

What is auditable: NAV history, share count history, and fee crystallisation events. You can verify any settlement against these public records.

Dispute window:

Ten business days from the statement. Detail in Fees and settlement.

Crystallisation before a drawdown:

It happens. The mechanics are unforgiving by design.

If a fee crystallises and the vault subsequently declines, the crystallised fee is yours. Investors are not refunded. If they stay through the drawdown and recovery, no new fees crystallise until the high water mark is exceeded again.

Same mechanics as traditional hedge funds. The fee is the fee. The strategy must clear the resulting high water mark before another fee accrues.