# Fees

This page will give you a better understanding of fees for borrowing WEN.

The total debt a borrower is undertaking includes the WEN principal borrowed, borrow fee, and the continuously accruing interest fee.

### Borrow Fee

The borrow fee is the fee charged to borrowers for borrowing WEN. It is added to the borrower’s debt. Borrow fees will be collected by the protocol and later distributed to sSHARE holders.

Example:

If the borrow fee is 5% and Alice borrows 1000 WEN, the total debt would be 1005 WEN. Alice will still receive 1000 WEN, and 5 WEN will be distributed to sSHARE holders. When Alice chooses to repay her debt, she has to repay a total of 1005 WEN (Excluding accrued interest fee).

### Interest Rate

The interest rate is the annualized borrowing interest of WEN, and it also acts as the risk parameter of the inherent risk in borrowing WEN against the collateral asset provided by the borrower. The interest rate for each collateral asset can be different due to the inherent risk of each asset.

Once the borrower opens a position, the interest fee will continuously accrue to the borrowed WEN balance of the borrower’s position. Interest fees generated by the protocol will be distributed to sSHARE holders.

Example:

If the interest rate is 1%, and Alice has total debt of 1005 WEN (Including borrow fee), and 12 months later, Alice will owe 10.05 WEN as interest fee.

If the borrower chooses to repay the debt partially, the principal and outstanding interest fee will be paid back proportionately. The remaining amount of debt will continue to accurate interest fee.

**Liquidation Fee**

**Liquidation Fee**

The liquidation fee is the incentive fee given to the liquidators performing liquidation. From the borrower's perspective, the liquidation fee is already included in the calculations when quoting a liquidation price for the respective collateral assets. When the borrower's liquidation price is reached, the position will be liquidated. From the liquidator's perspective, the liquidation fee is the discount a liquidator gets when buying collateral flagged for liquidation.

All Fees are calculated and can only be paid in WEN.

### Fee Distribution

Fees generated by borrowing and liquidating will be distributed to sSHARE holders, liquidators, and the reserve. Distribution Ratio:

Borrow fee and Interest fee: 80% of borrow fee and interest fee will be distributed to sSHARE holders and 20% will be distributed to the reserve as the backstop.

Liquidation fee: 90% of the liquidation fee will be distributed to the liquidator, 8% will be distributed to sSHARE holders and 2% will be distributed to the reserve as the backstop.

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