Fees

Reserve Factor (Interest Fee)

A percentage of all interest earned by suppliers is directed to the protocol treasury.

• Typical value: 10 to 20%

• Who pays: Effectively shared between borrowers and suppliers. Borrowers pay the full rate; suppliers receive the rate minus the reserve factor.

• When charged: Continuously, as interest accrues.

Example: Borrow rate is 10%, reserve factor is 10%. Suppliers receive 9% APY and 1% goes to the protocol.

Flash Loan Premium

A flat fee charged on every flash loan.

• Default: 9 basis points (0.09%)

• Who pays: The flash loan borrower.

• When charged: At repayment, added to the required repayment amount.

Example: Flash borrow 1,000,000 USDC. Premium = 900 USDC. You must repay 1,000,900 USDC.

Liquidation Protocol Fee

A portion of the liquidation bonus is claimed by the protocol.

• Default: 0.3%

• Who pays: Deducted from the collateral before transfer to the liquidator.

• When charged: During each liquidation event.

What K2 Does Not Charge

• No deposit fees. Supplying assets is free.

• No withdrawal fees. Withdrawing your assets costs nothing beyond the standard Stellar transaction fee.

• No repayment fees. Repaying debt has no additional charge.

• No lock-up penalties. No fees for early repayment or withdrawal.

Stellar Network Fees

Every transaction on Stellar requires a small fee paid to the network, not to K2. These fees cover the computational cost of processing your transaction on-chain, similar to gas fees on other blockchains. In practice they are tiny, typically fractions of a cent, and are paid automatically from your wallet when you initiate any action such as supplying, borrowing, repaying, or withdrawing.

Where Do Fees Go?

All protocol fees are collected in the Treasury contract. The treasury address is configured by the pool admin and can be a multisig account for added security. Treasury funds can be used for protocol development, security, and maintenance.