Why a rate is shown before the fees are taken out

A vault advertised a yield and depositors expected their balance to grow at that rate. The figure was gross: before the vault’s performance fee, before management fees, before the gas cost of the frequent transactions that generated it. Netted out, depositors received noticeably less, and small depositors, for whom fixed gas costs loomed large, sometimes received almost nothing. The displayed rate described the pool’s output; the fees, subtracted later, described what the depositor actually kept.

What everyone sees

A depositor reads the advertised yield as the rate their money will earn — what lands in the account. A single prominent number implies it is the final, take-home figure. The depositor plans around it and does not mentally subtract layers of fees that are disclosed elsewhere or not at all, treating the gross headline as though it were the net result.

What is actually happening

Gross-versus-net distinctions are decisive in yield products, and finance research on fee disclosure shows that headline rates quoted before fees systematically overstate realised returns, with the gap widening for smaller balances and higher-turnover strategies. Performance fees skim the upside, management fees accrue regardless, and gas costs are a fixed drag that hits small depositors hardest. The single displayed rate omits all of these, presenting output as though it were take-home.

Why it stays hidden

The hidden mechanism is the display of a gross figure in the slot the reader reads as net. Nothing is falsified — the gross rate is real — but by foregrounding it and deferring the fees, the product lets the depositor assume the headline is the result. The subtractions happen after the impression forms, so the number that sells is larger than the number that arrives.