Automated Fee Collection

The Frictionless protocol is designed to automate cash operations across the lifecycle of a fund, part of this automation is the collection of contracted fee structures within a fund, such as management and/or performance fees.

The smart contracts for securities exchange, transfer, ERC20 swap and FX swaps may be programmed to automatically collect fees for Managers, opening new revenue streams for Managers whilst ensuring the visibility of fees for Investors and Managers alike.

The following diagram illustrates the design of the fee module, which enables the definition of fees to be automatically collected by a defined fee recipient during any of the value exchange functions in the protocol.

Fees may be configured to be collected in the following transactions:

  1. P2P (bi-lateral) transfer of tokens between permissioned counterparties, for example, a direct transfer of securities between two Investors, such as a secondary trade.

  2. Exchange of securities, executed by the protocol during a primary issuance, in the form of management fees upon committed capital or deployed capital.

  3. Settlement of securities, executed by the protocol or by the Investor.

  4. Conversion of an ERC20 token to/from a FrictionlessFundDepositToken, for example, converting USDC to the USD equivalent FrictionlessFundDepositToken or conversion of another ERC20 collateral.

  5. FX swap of FrictionlessFundDepositToken of different currencies.

The fee architecture permissions the protocol admin to establish fees, this ensures that the market integrity for fees is maintained, for example, the FX rates are taken from our FX partner's spot and forward rates quoted, and the conversion of ERC20 stablecoins such as USDC and USDT to it's USD equivalent FrictionlessFundDepositToken.

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