> For the complete documentation index, see [llms.txt](https://docs.premia.blue/llms.txt). Markdown versions of documentation pages are available by appending `.md` to page URLs; this page is available as [Markdown](https://docs.premia.blue/the-premia-protocol/governance/voting-vxpremia/vxpremia-rewards/protocol-commissions.md).

# Protocol Commissions

## **Premia Blue (V3) Protocol Fees:**

* Three layers of fees: Base, Margin, and Vault.
  * **Base Layer** amasses commissions from the greater of either 3% of premiums paid or 0.3% of the notional value transacted. On Settlement, a fee of 0.3% is collected, not to exceed 12.5% of the option's value. (Rates subject to change by vote)
  * **Margin Layer** is a two-part equation. Firstly, it subtracts 0.4% from the Prime Rate (driven by supply and demand dynamics) charged to providers of margin lending liquidity. Secondly, it levies a 15% fee on users' liquidated positions. (Rates subject to change by vote)
  * **Vault Layer** includes a 2% per annum management fee and a 20% fee on all positive returns for all native vaults (built in-house). (Rates subject to change by vote)
    * For Vaults developed by third parties, fees will be negotiated ad-hoc on a case-by-case basis.
* Distribution of fees to Staking Users (vxPremia), Premian Republic, and the Insurance Fund.
  * **Staking Users** are allotted 80% of Base Layer fees.
  * The **Operator Group** receives 20% of Base Layer fees.
  * The **Insurance Fund** collects 100% of the fees from the Vault and Margin Layers.
* Parliament will reconvene every January to re-access the allocations and amend, any changes will be submitted for a vote before any action is taken. The first meeting will be January 2024.

Premia V2 Protocol Fees: Premia charges a 3% Protocol Fee to option buyers and a 2.5% Utilization Fee to LPs. 80% of fees are paid to $PREMIA staking users.

#### Premia Classic (V2) Fees Below:

Upon creation of a trade on the platform, a taker fee is currently charged:

* Taker Fee - 3% of option premium applied at option creation

Currently, upon settlement of any trade, a utilization fee is captured.

* Utilization Fee - 2.5% annual interest fee applied at settlement based on length & size

These fees are collected on a source chain level (chain independent), and allocated to vxPREMIA holders on a pro-rata basis of their percentage influence on that source chain.


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