💰Business Model

Protocol Fee: A commission on the Fund Manager fees.

How do you make money?

SAAS pricing model of a 5% protocol fee on the Fund's fees (pay-as-you-earn). E.g. for a fund with a 2-20% fee schedule, Fume's commission would be:

- Management commission = 2% * 5% = 10bps (0.1%)

- Performance commission = 20% * 5% = 100bps (1%)

(+ an optional legal setup fee from $10'000 depending on the chosen structure).

How much could you make?

Example - Hedge Fund

• Fee Structure: Management Fee [2%], Performance Fee [20%], Subscription Fee [1%]

• Metrics: AUM [$50M], First-Year Perf [35%]

• Total Fees = $5M

• First-Year Protocol Fee = $250,000

• See the calculation

How did you come up with this pricing?

Fixing a protocol fee at 5% implies a pay-as-you-go fee. It aligns the incentives between the administration (Fume) and the managers. During good market conditions (or managers' performance) and with sufficiently large funds would be a severalfold increase from the average admin/custodial costs currently paid. This pricing allows the creation of much smaller funds and survival during difficult market conditions.