# Fees Structure

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City Protocol implements a transparent, on-chain fee structure designed to align the incentives of vault operators, depositors, and the protocol itself. 

All fee structures are encoded directly in the vault's smart contract and visible to any investor prior to deposit, eliminating information asymmetry between managers and their depositors.
{% endhint %}

### Fee Types

<table><thead><tr><th width="165.6015625">Fee Type</th><th width="392.01171875">Charged On</th><th>When Collected</th></tr></thead><tbody><tr><td>Management Fee</td><td>Total AUM (accumulates continuously over time)</td><td>At each settlement</td></tr><tr><td>Performance Fee</td><td>New profits above the high-water mark</td><td>At each settlement</td></tr><tr><td>Entry and Exit Fee</td><td>New deposit and withdrawal requests</td><td>At each settlement</td></tr><tr><td>Protocol Fee</td><td>Vault fees collected (capped at 30%)</td><td>At each settlement</td></tr></tbody></table>

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### Fee Distribution

At every settlement, the vault mints new shares to represent the fees owed. These shares are sent directly to the `feeReceiver` address configured at vault creation.

Fees are distributed as **shares, not assets**. This means the fee receiver participates in the vault's performance from the moment fees are collected, without triggering any asset movement.


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