The Protocol's Cut
We've seen the rates, the caps, and the flywheel that grows the whole machine - now let's look at the thinnest slice of all: what Own itself keeps.
If you're expecting a fee schedule, this will be a short chapter - and that's the point. Own's revenue design is unusual enough to be worth stating plainly: the protocol taxes almost nothing, on purpose, and what it does take never touches your entries, exits, or backing.
What you never pay
Start with the list of fees that don't exist:
- No mint fee. When Maya minted, her full payment went to the market maker. The maker's margin is the spread inside its quoted price - not a protocol levy on top.
- No redeem fee. Same in reverse: the maker's payment reaches the seller whole.
- No PSM conversion fee. Converting a wrapper token to an eToken and back
- the in-kind door that anchors the peg and guarantees the exit - is free in both directions, by design. The protocol will not tax the path that makes its own guarantee work.
- No fee on force-execution. The emergency exit pays out at the bare oracle price, unskimmed.
Own's philosophy is that revenue should come from facilitating flow, not from tolling the doors. Every fee that doesn't exist makes the eToken cheaper to hold and trade - which grows the flow that everyone downstream earns from.
Where money actually flows
So who earns what? Let's put the full picture in one place, because it's mostly a story about other people getting paid:
| Stream | Who pays it | Who receives it |
|---|---|---|
| Trading spread | Traders (in the quoted price) | Market makers - in full |
| Borrow base rate | Borrowers | Aave (the credit line), at cost |
| Borrow premium | Borrowers | Vault Manager → mostly LPs, a treasury cut |
| Native yield | - | LPs (their collateral's own earnings) |
| Dividends on loan collateral | - | The vault (LPs), while loans are open |
| Reserve dividend surplus | - | eToken holders, via the dividend accumulator |
| PSM fill spread share | PSM fillers (from their arb edge) | Protocol treasury - set to 0 at launch |
Two rows belong to the protocol, and both deserve a closer look.
The treasury's two trickles
A share of the lending premium. The premium borrowers pay above Aave's rate is swept to the Vault Manager, who passes the bulk of it into the vault for LPs; a slice of that split is the protocol treasury's operating income. It's a percentage of a premium on a loan book - real money at scale, invisible at the individual trade level.
A share of PSM fillers' edge. Recall from Chapter 6 that anyone can fill a resting order against the reserve through the PSM - a permissionless arbitrage. The protocol can take an admin-set share of the filler's spread over the fair mark - and only that. The order owner's terms are untouched, the backing is untouched, and a fill with zero edge pays zero fee, so the fee can never turn a profitable fill unprofitable. Even this dial launches set to zero.
And one deliberately unglamorous flow: when a lending position ends in bad debt, the seized collateral lands in the treasury - not as income, but as the transparent holding pen for working out losses. The treasury is where messes get cleaned up in the open, not a toll booth.
Why so thin?
A fair question: how does a protocol that charges nearly nothing sustain itself?
By owning the venue, not taxing it. Every fee Own doesn't charge is a reason for flow to come here rather than anywhere else: holders keep more, loopers' math clears at lower funding rates, arbitrageurs close the peg tighter, makers quote tighter spreads against cheaper flow. Volume compounds through the flywheel, and the treasury's percentage-of-premium grows with the loan book it sits on. A thin, growing slice of a compounding machine beats a fat slice of a stalled one.
It also keeps incentives clean. A protocol that earns from mint/redeem fees quietly wants churn. A protocol that earns from the lending premium wants exactly what its LPs and borrowers want: a full, healthy loan book. Own's treasury only does well when the marketplace does.
The bottom line
We've now walked the entire money story - demand, capture, dials, and cut. Here's the whole thing on one page:
| Question | Answer |
|---|---|
| Where's the demand? | Holders wanting clean RWA exposure + funds harvesting perp funding (~13% on hot names) |
| How is it captured? | Borrowers pay ~7% - Aave's rate at cost, plus a ~3% premium that flows to the marketplace |
| What do LPs earn? | Native yield + lending premium + flow share ≈ 2x their collateral's own benchmark (projections) |
| What do makers earn? | The full trading spread, on ~1x recycled capital |
| What do holders earn? | The asset's moves plus its dividends, with no holding cost |
| What keeps it safe? | The 65% solvency cap, per-asset ceilings, and the golden rule - never loosened for growth |
| What does Own keep? | A cut of the lending premium, plus a (currently zero) share of PSM fillers' edge |
Everyone is paid out of the same real activity, and no single party's cut is large enough to break the others'. That's the shape of the business - thin in the middle, thick where the work happens.
What just happened
- Own charges no fee to mint, redeem, convert through the PSM, or force-execute - the doors are deliberately toll-free.
- Market makers keep the full spread; Aave gets its base rate at cost; the premium above it flows through the Vault Manager mostly to LPs.
- The treasury's income is a cut of that lending premium, plus an admin-set share of PSM fillers' arbitrage edge (launched at zero, and structurally unable to hurt order owners or the backing).
- Bad-debt collateral lands in the treasury for transparent workout - a cleanup pen, not a profit center.
- Thin is the strategy: toll-free doors attract the flow, and the protocol's slice grows with the lending book instead of taxing the users.