Protocol Economics

How Underscore generates revenue and what happens with it

Underscore generates revenue through fees on value-generating activities. All protocol revenue is used to buy back RIPE tokens from Ripe Protocol, our partner protocol.

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Revenue Sources

Vault Performance Fees (Primary)

The largest source of protocol revenue comes from Vaults — AI-managed yield strategies that optimize returns across DeFi protocols.

• Fee: 20% of yield profits

• Applied to: Profits only, never principal

• When charged: When yield is realized

Example: A vault generates $100,000 in yield across all depositors

• $20,000 → Protocol revenue

• $80,000 → Distributed to depositors via increased share price

Vault performance fees scale with protocol TVL and yield performance, making this the primary revenue driver as Underscore grows.

Swap Fees

Charged on token swaps executed through Underscore wallets.

• Fee: 0.25% of trade amount

• Applied to: All swaps (including stablecoin pairs)

Example: $10,000 swap → $25 fee

External Reward Claim Fees

Charged when claiming rewards from integrated protocols (MORPHO, WELL, AERO, etc.).

• Fee: 20% of claimed rewards

• Applied to: External protocol incentives only

Example: Claim $200 in MORPHO rewards → $40 fee

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What's Free

No fees on:

• Transfers between wallets

• Deposits and withdrawals

• Idle funds

• Debt operations (borrowing/repaying)

• Liquidity provision

• ETH/WETH wrapping

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Revenue Allocation: RIPE Buybacks

All protocol revenue is used to buy back RIPE tokens from Ripe Protocol, our partner protocol.

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Summary

Revenue Source	Fee	Relative Size
Vault Performance	20% of yield	Largest (scales with TVL)
Swap Fees	0.25% of amount	Medium
External Rewards	20% of claims	Smaller

100% of revenue → RIPE buybacks