Fees
All fees associated with minting, redemption, and holding LBTC. Fees only apply to the active allocation and are subject to a high-water mark. Meaning that until a certain performance is achieved no fees are taken. The passive allocation is never charged, and the 2.5% net APY target is stated net of this fee.
Fee Summary
Protocol Rewards Fee
Amount: 20% of covered-call strategy gains (there is no protocol operating fee) Applies to: Yield generated by the active allocation, subject to a high-water mark Deducted: From strategy gains before they reach the LBTC exchange rate
LBTC’s yield comes from an institutional covered-call options strategy managed by Bitwise Investment Manager, LLC. A 20% Protocol rewards fee applies to the gains that strategy produces, and nothing else. There is no Protocol operating fee. In any period where the strategy produces no net-new gains, no fee is charged at all.
How the fee is taken
The protocol rewards fee is deducted from strategy gains at the protocol level, before those gains are reflected in the LBTC/BTC exchange rate.
Illustrative figures. In this period the strategy earned 1.00 BTC of gains; 0.20 BTC is taken as the Protocol rewards fee and 0.80 BTC flows into the reserve, lifting the LBTC/BTC exchange rate for all holders.
The 2.5% figure is a target, is variable and not guaranteed, with losses possible.
Minting Fee
Amount: 0% (Ethereum mints authorize a small network gas fee) Applies to: Ethereum only
0% minting fee. On chains where network fees are higher, such as Ethereum, users authorize a small network fee in LBTC. This fee is deducted when Lombard Protocol relays a transaction to mint LBTC, and is a contribution towards the network gas fee paid by Lombard Protocol.
Other chains: No minting fee. Lombard covers gas costs on Base, Solana, Sui, and other supported chains.
How It Works
Before your first Ethereum mint, your wallet prompts you to sign an “Authorize Network Fee” message. This authorizes Lombard to deduct the fee from your minted LBTC.
You can see the exact fee amount in the app before confirming your deposit. In the unlikely event where Lombard Protocol does not mint LBTC, the user may do this themselves, paying the associated network gas fee. In this scenario, there are no fees deducted by Lombard Protocol.
Redemption Fee
Amount: 0.0001 LBTC (fixed) Applies to: All redemptions on all chains
This is called the Network Security Fee. It serves two purposes:
- Contributes to Bitcoin network fees paid by Lombard when processing withdrawals
- Makes denial-of-service attacks economically prohibitive
Lombard does not profit from this fee. Redemptions are honored in native BTC at the current exchange rate and funded from the liquidity buffer first, within a window of up to 10 days.
Minimum Redemption Calculation
Frequently Asked Questions
Next Steps
- Understanding Yield, how LBTC yield works and what to expect
- Use LBTC, minting and redemption guide
- FAQ, more questions about LBTC