Each Strategist can combine both
Note: if a Strategist wants to invite copiers to a Private Strategy or make their Strategy Public, it is mandatory to set at least one of the above-mentioned fees to at least 1%. For more information, please take a look at the Strategy Visibility settings.
The performance fee is a fee charged to users who copy Crypto Strategies. The fee is collected only when copiers make a profit (it is calculated based on the amount of profit copiers make from their initial investment or previous "High-water mark"). It is collected based on the collection period determined by a Strategist – it can be weekly, monthly, or quarterly. It is distributed in the first week of the following month according to the affiliate program.
Strategists are able to monetize their knowledge by generating returns for copiers, and in turn, be rewarded with a performance fee for their skills. This means that the Strategist has a monetary incentive to perform. While copiers can be sure that when the market goes down, and the Crypto Strategy is not performing well, they are spared the fees.
Note: A performance fee and “high-water mark” feature are commonly used. If you need in-depth knowledge, we encourage you to get more familiar with these terms also from other resources (internet, etc.).
Performance fee benefits
- fees are collected only when you make a profit from your initial investment or previous "High-water mark"
- Strategists with better Crypto Strategy performance are rewarded more
- fees bring fairness and balance to the copier/Strategist relationship
- copiers don’t pay performance fees for strategies that do not perform
Each Strategist can set up the performance fee up to 30% and determine the period of collection of the performance fee – it can be weekly, monthly, or quarterly.
Please find information on how to change the fee at the bottom of this article.
How is the performance fee calculated?
For easier understanding, the calculation below is simplified.
John is an investor.
He decided to diversify his investment, and copy a certain Crypto Strategy created and led by ICONOMI Strategist. He added funds (100 euro) to copy the Strategy. The Strategist has set the performance fee to 20%, the period of fee collection is weekly.
The end of Week 1 (calculation starts based on 100 euros):
The market goes up 15%.
John’s investment is now worth 115 euros.
He pays a 3-euro performance fee (20% from the 15 euros profit) and has 112 euros left.
The End of Week 2 (calculation starts now based on 112 euros):
The market goes down 20%.
John’s investment is now worth 89.60 euro.
There is no profit and he pays no fee.
The End of Week 3 (calculation starts now based on 89.60 euros):
The market goes up 10%.
John’s investment is now worth 98.56 euro.
Despite the profit in Week 3, he pays no fee because of the “high-water mark” implementation – his investment has not surpassed the highest peak investment value of 115 euros from Week 1.
The End of Week 4 (calculation starts now based on 98.56 euro):
The market goes up 25%.
John’s investment is now worth 123.20 euro and reaches a new “high-water mark.”
He pays only a 1.64 euro performance fee (20% from the 8.20 euros profit: 123.20 euros in Week 4 minus previous “high-water mark” 115 euros in Week 1; and not 20% from the 24.64 euros in Week 4 profit ), and has 121.56 euros left.
What did we learn?
The performance fee is only being deducted from John’s account when the market goes up.
To bring additional fairness to the table, we’ve also implemented the so-called “high-water mark”. Please find the explanation about “high-water mark” below.
Joyce is a Strategist.
Joyce decided to create her own Crypto Strategy that includes a 2% copying fee and a 20% performance fee. As an experienced Strategist, she got 10 copiers right away. In the meantime, a month had passed, and her Crypto Strategy had a return of 10%. What does that mean for her and her copiers?
Let’s say Joyce’s copiers pulled together €100,000. After a month, their investments are worth €110,000. What does this mean for Joyce?:
Crypto Strategy value (Assets Copying Strategy (ACS) - represents the sum value of all assets copying strategy): €110.000
Fee Income: €1.733,33 (after deduction of ICONOMI's share of fees)
In order to treat our users (Crypto Strategy copiers) fairly, we implemented the so-called “high-water mark.” (see high-water marks examples on the chart below: high-water marks are presented with the dots A-B, C-D, E-F). What does that mean? Simply put, in case the value of your investment in a Crypto Strategy drops, you will not pay any performance fees until the value of your investment reaches the previous high. In other words, you will not pay any performance fees twice for the same amount of performance.
(high-water marks are presented with the dots A-B, C-D, E-F)
When do you start paying performance fees?
On the day that the Crypto Strategy switches to a performance fee, we will calculate a high-water mark for each copier. We will calculate it based on the values at the time you added funds (average high-water mark applies: Fee is calculated based on copiers’ average entry point and not the high-water mark on the day the performance fee came into force. This applies only to copiers who have less value now than when they added funds. For copiers who are better off now than when they added funds, the performance fee kicks in immediately).
Let’s say you’ve invested 200 EUR to copy a Crypto Strategy. The Strategist later added a performance fee and on the day the performance fee goes live, the value of your investment is 150 EUR. This means you will not pay any performance fee until the value of your investment exceeds high-water mark 200 EUR.
What if you bought and sold, and bought again?
In this case, we follow the so-called ‘FIFO’ (first in first out) principle to calculate your average price.
When the market goes down, and up again – do you have to pay the performance fee twice?
In a word – no. The very point of the high-water mark is to prevent you from paying twice for the same service. So until the value of your investment reaches the previous peak, you will not be charged any performance fee.
How is the fee collected?
ICONOMI collects the performance fee directly from the users' (copiers) accounts and shows the fee as a transaction in the users’ activity page. The performance fee is collected based on the period of the collection – it can be weekly, monthly, or quarterly.
Strategists are excluded from paying performance fees in their own strategies
The Strategist's seed investment is not a part of the performance fee payment scheme. Through this, Strategists will keep 100% of their performance gains since the capital is not subject to either affiliate or ICONOMI fees. This directly affects the ICONOMI business model, reducing ICONOMI short-term income. The tradeoff is that the Strategists have more marketing potential.
How are Strategists and affiliates paid?
What does the fee mean for a Crypto Strategy copier?
The performance fee is charged based on the period of collection – it can be weekly, monthly, or quarterly, to users who copy Crypto Strategy.
Changing the fee
Performance fee can be changed twice a year.
When do changes take effect?
In case a Strategist reduces a performance fee, such a reduction takes immediate effect.
If, however, a Strategist decides to increase a performance fee, existing copiers will receive email notification of such a planned increase. However, the new performance fee will only apply after ten days, giving the copiers a chance to reconsider their investment options. Copiers will receive another email on the day the new performance fee takes effect. If copiers don’t agree with the change of fees for the Crypto Strategy they are copying with their funds, they can remove funds from copying the strategy any time they want.
How do you as a Strategist change the fee?
To change the fee for your Strategy, follow these steps:
- Log into your ICONOMI account
- go to My Strategy
- select your Crypto Strategy
- go to the Settings tab
- go to the Fees section
- click on Change
Please find additional information in our blog posts "The Crypto Strategy I invested in is migrating to a performance fee. What does that mean for me?" and "Crypto Strategy Strategist, Get Rewarded for Your Performance".
You can check individual Crypto Strategy fees by clicking on the selected Crypto Strategy.
Note: The Strategist sets Crypto Strategy fees for an individual Crypto Strategy. Anytime Crypto Strategy fees are collected they are split between ICONOMI, the Strategist, and the affiliate according to the Affiliate program (after VAT).
Fees are collected over the course of each month in crypto. As such, the collected value is subject to market fluctuations, and the paid-out EUR/GBP value at the end of each month may be lower or higher than initially collected.
Note: For more information, please read our article on ICONOMI fees.