Merlin Protocol
  • Merlin Protocol
    • Intro
    • 0. Abstract - Features Implemented at the Choice of the DAO
    • 1. Decentralization and DeFi
      • 1.1 Features implementable at the choice of MerlinDAO
      • 1.2 Computer system
      • 1.3 Onchain Vs Offchain
      • 1.4 Risk Management
    • 2. The Merlin token, the MerlinDAO and future scenarios
      • 2.1 Merlin token (MRN)
      • 2.2 Merlin DAO
      • 2.3 Scenario of possible monetization of the MerlinProtocol
        • 2.3.1 Liquidity in the Liquidity Pool, Token Buyback and Burning
        • 2.3.2 The types of commissions that end up in the Liquidity Pools
      • 2.4 Staking
      • 2.5 Tokenomics
    • 3. Funds
      • 3.1 Top Cap
      • 3.2 Middle Cap
      • 3.3 Thematic Baskets
      • 3.4 Basket managed directly by MerlinDAO
      • 3.5 Index managed by AI
    • 4. How to use WebAPP to create and invest in TokenXFund decentralized funds
      • 4.1 Aladin fund creator user
        • 4.1.1 Use Case UCF1
      • 4.2 User investor of a fund
        • 4.2.1 Use Case UIF1
        • 4.2.2 Example: UIF1 use case
        • 4.2.3 UIF2 use case
        • 4.2.4 Example: UIF2 use case
    • 5. The creation and management of managed funds
      • 5.1 Active management
      • 5.2 Performance and benchmark
      • 5.3 Performance fees
      • 5.4 Ranking of Managed Funds
    • 6. Tokens to invest in
      • 6.1 The selection criteria for big and mid cap tokens
      • 6.2 Selection criteria for small and micro caps and ranking of tokens to put in portfolios
      • 6.3 Portfolio Composition Limits
    • 7. Oracles
      • 7.1 Decentralized Oracles
      • 7.2 Oracle design pattern
      • 7.3 ChainLink oracles —> (ChainLink Docs)
      • 7.4 Decentralized Data Model
      • 7.5 Data Security
      • 7.6 Uniswap v3 Pricing Oracles —> (Uniswap V3 whitepaper)
      • 7.7 Random Number Generator Oracles
    • 8. Swapping for fund rebalancing
      • 8.1 What is a Swap and why to Swap
      • 8.2 How to Swap
      • 8.3 When to Swap
      • 8.4 Javascript SDK for Uniswap v3
      • 8.5 DEX Expansion
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  1. Merlin Protocol
  2. 5. The creation and management of managed funds

5.3 Performance fees

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Last updated 2 years ago

It is foreseeable the application of a small commission of entry and performance that will allow you to delegate to the protocol the costs of gas and rebalancing of your portfolio.

The fee is estimated to be 3% in and 3% out on the outperformance you take home over eth.

In addition, the investor will be free to choose the best performing managed funds net of fees, fees that the manager can claim in proportion to their performance and risk profile compared to ethereum (or BNB depending on the blockchain reference).

The performance fees of the manager will be evaluated by comparing the risk-weighted performance of the managed fund with the risk-weighted performance of ethereum (or BNB) according to the Sharpe Ratio.

where Rp = return of portfolio Rf = risk-free rate - in our case K σp = standard deviation of the portfolio's excess return

The manager's fees, based on 1% incoming and 1% outgoing, will then be proportional to the sharpe ratio with respect to ETH according to the following table:

  • Sharpe Ratio Fund > Sharpe Ratio Eth +10% - +0,75% manager fees

  • Sharpe Ratio Fund > Sharpe Ratio Eth +5% - +0,50% manager fees

  • Sharpe Ratio Fund > Sharpe Ratio Eth - +0,25% manager fees

  • Sharpe Ratio Fund = Sharpe Ratio Eth - +0% manager fees

  • Sharpe Ratio Fund < Sharpe Ratio Eth - -0,25% manager fees

  • Sharpe Ratio Fund < Sharpe Ratio Eth -5% - -0,50% manager

  • fees Sharpe Ratio Fund < Sharpe Ratio Eth -10% - -0.75% manager fees

This fee will go in part to the Liquidity Pool and in part to the manager and may be increased, within the limit of 3%, or reduced on the basis of the outperformance of the fund with respect to eth (or BNB) and the outperformance of the Sharpe Ratio of the fund with respect to eth (or BNB) as explained above.