Source of Revenue for JinDAO

JinDAO generates its income through two primary channels, which are critical to the financial sustainability of the organization. Firstly, it charges a 1% annual administrative fee on the invested amount, which is an essential aspect of the DAO's revenue stream. This fee enables JinDAO to cover the costs of managing and operating the DAO while providing key services to its users.

Secondly, JinDAO collects a performance fee with a watermark of 10% from both the DeFi Growth Fund (DGF) and Multi-Strategy Fund (MSF). The watermark ensures that investors only pay a fee on returns generated above a particular high watermark level. This incentive fee is designed to incentivize the fund managers to maximize the performance of the funds and deliver significant returns to investors.

These two revenue streams are fundamental to JinDAO's modus operandi, ensuring that it remains financially sustainable and can continue to deliver value to its users. By maintaining a steady stream of income, JinDAO can focus on its mission to provide a range of investment opportunities in the DeFi ecosystem while prioritizing user protection and stable returns.The distribution of revenue will be allocated towards various areas such as token buybacks, the maintenance and growth of the DAO team, and expanding partnerships and marketing efforts.

In addition, JinDAO is committed to providing its users with greater flexibility and added benefits for holding $JIN tokens. As part of this commitment, JinDAO is set to introduce an option that allows users to use $JIN tokens to offset the administrative fee. By utilizing $JIN tokens, users can significantly reduce the administrative fee by 50%, which will ultimately lead to a reduction in the overall cost of participation on the platform.

Administrative Fees

Administrative fees refer to the charges that investment managers levy on investors to cover the operational and administrative costs of running the fund. These fees are typically calculated as a percentage of the assets under management and are charged annually. Administrative fees are meant to cover operating expenses.

Performance Fees

In simpler terms, performance fees are the charges that fund managers levy on their clients for the returns generated on their investments. These fees are typically calculated as a percentage of the profits made on the investment and are intended to motivate fund managers to perform well, as their compensation increases when their clients' investments generate higher returns.

Watermarked Performance Fees

Watermarked performance fees, also known as high watermark fees, are a common feature in the world of finance, particularly in hedge funds and investment management. The concept is designed to incentivize fund managers to generate returns for their clients by tying their compensation to the success of the investment.

High Watermark

The high watermark, on the other hand, is a reference point that represents the highest value that the investment portfolio has achieved. This mechanism ensures that fund managers do not receive performance fees on the same gains twice, as the fees are only charged on returns generated above the high watermark level. This structure ensures that fund managers are incentivized to generate higher returns for their clients, and their compensation is directly tied to the success of the investment.

To summarize, watermarked performance fees refer to the charges levied by investment managers or funds only when the portfolio value exceeds a previously established high watermark. Fund managers earn these fees only when they generate returns that surpass the highest historical value of the portfolio. This approach incentivizes fund managers to focus on generating higher returns for their clients while minimizing the risk of double-charging for the same gains.

To better understand the concept of high watermark fees, let's consider an example.

If an investor puts $100,000 into a hedge fund with a 20% performance fee and a high watermark, and the investment grows to $120,000 in the first year, the fund manager will charge a $4,000 performance fee (20% of $20,000).

If in the second year, the investment drops to $110,000, the fund manager won't charge any performance fees as the investment value is below the high watermark of $120,000.

However, if in the third year, the investment value increases to $130,000, the fund manager will charge performance fees only on the $10,000 profit above the high watermark ($130,000 - $120,000). In this case, the performance fee will be $2,000 (20% of $10,000).

In summary, watermarked performance fees ensure that investment managers are rewarded for generating new profits and not for recovering losses. It also ensures that clients are not charged fees on the same gains twice. This aligns the interests of the investment manager with those of the investors, as the manager is incentivized to perform well and protect the portfolio's value.

This fee structure is crucial in ensuring that JinDAO can continue to provide a reliable and sustainable platform that can benefit all users. By introducing the option to use $JIN, JinDAO is also creating more opportunities for users to participate in the platform and take advantage of the various investment opportunities.