> For the complete documentation index, see [llms.txt](https://docs.snowballfi.app/llms.txt). Markdown versions of documentation pages are available by appending `.md` to page URLs; this page is available as [Markdown](https://docs.snowballfi.app/documentation/protocol-mechanics/fees.md).

# Fees

Snowball charges protocol fees on key user actions. These fees are distributed across `$AVAX` backing, bribes, and operational costs — forming the backbone of Snowball’s 'up-only' value mechanics.

###  🧊 Fee Structure

| Action            | Fee                           | Distribution                                |
| ----------------- | ----------------------------- | ------------------------------------------- |
| **Minting**       | 2.5% (on AVAX deposit)        | 65% → AVAX backing, 35% → Treasury + Bribes |
| **Burning**       | 2.5% (on AVAX redemption)     | 65% → AVAX backing, 35% → Treasury + Bribes |
| **Loan Interest** | Linear APR (6.9% annual rate) | 65% → AVAX backing, 35% → Treasury + Bribes |
| **Flash Loans**   | 1.0% per tx                   | 100% → Protocol Revenue                     |

***

###  💸 Looping Discount

When using one-click looping via the Snowball dApp:

* Minting fee is reduced from 2.5% → 1.0%
* Fee still follows the same 65/35 split

***

### 📈 Interest Fees

Snowball uses a linear interest model with a 6.9% APR, charged upfront when initiating a loan.

**Interest Formula:**

```
Interest = Borrowed × (6.9% APR) × (Loan Days ÷ 365)
```

For example, borrowing 100 AVAX for 30 days:

```
Interest = 100 × 0.069 × (30/365) ≈ 0.567 AVAX
```

**Minimum Fee Safeguard:**

To prevent users from bypassing burn fees via short-term loans, Snowball enforces a minimum interest fee:

```
Minimum Fee = Burn Fee − Overcollateralization Buffer
```

If standard interest is below the minimum, the minimum fee applies instead.

**Examples:**

* **1-Day Loan** → Min fee triggered (e.g., \~1.69 `$AVAX` on 100 `$AVAX` borrow)
* **365-Day Loan** → Standard fee applies (e.g., 6.9 `$AVAX`)

This ensures borrowing isn’t cheaper than just burning `$SNOW`.


---

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