# Fee Structure

Tharwa's sustainability comes from a clear and defensible fee model, one designed to reward aligned users, fund long-term operations, and ensure the system can scale responsibly.

Rather than charging users arbitrarily, Tharwa’s fee structure is based on capital movement, utility unlocked, and value delivered.

### How Fees Work

There are three core types of fees across the protocol:

#### 1. **Vault Fees**

Each vault is designed to generate real-world yield. Tharwa charges a small percentage of that yield as a management or performance fee, depending on the vault class. These fees are built into the vault's design and reflected in net yield shown to users: no hidden costs, no surprise penalties.

#### 2. **Redemption & Early Exit Fees**

For vaults that require longer commitment periods (e.g., 90-day sukuk tranches or real estate pools), early exits may incur a fee. This isn't about punishing users, it protects vault integrity by discouraging churn and helps maintain predictable liquidity cycles. Users are always informed upfront of any applicable exit conditions.

#### 3. **OTC & Trading Fees**

When the OTC Marketplace launches, a small spread or flat fee may be charged on certain transactions, especially for large thUSD redemptions or direct asset pairings. These are structured to be competitive with DEX alternatives while providing deeper and more protocol-aligned liquidity.

### Where Fees Go

Collected fees don’t sit idle. They’re used to:

* Fund ongoing protocol operations
* Strengthen peg defense buffers
* Bootstrap new vault strategies
* Support liquidity in secondary markets
* Eventually, reward sTRWA stakers with yield or thUSD (depending on governance outcomes)

This creates a full feedback loop:

{% hint style="info" %}
vaults generate yield → a portion funds the system → users benefit through better access, better protection, and long-term sustainability.
{% endhint %}

### No Emissions. No Friction.

Unlike most DeFi protocols, Tharwa doesn’t rely on token emissions to subsidize its fee model. There’s no constant dilution or gameable token farming. The value users get is the result of real-world performance, not artificial incentives.

And because thUSD is fully collateralized and transparent, users don’t pay for opacity or hidden counterparty risks. You see where your yield comes from and what it costs to access it.
