Gamma

Gamma fees are 14-20% of earned LP fees plus on-chain gas

Posted August 2026

Gamma fees are a vault-level management charge equal to 14-20% of trading fees earned by managed liquidity, not 14-20% of the deposited assets. The LP retains 86% at the low end or 80% at the high end before wallet transaction costs. Approvals, deposits, withdrawals, and optional rewards actions also consume network gas. The model therefore suits hands-off liquidity providers whose fee income can absorb gas and the manager's share over their intended holding period.

The short version: They are LP vault costs deducted from earned trading fees, best suited to hands-off liquidity providers who can absorb deposit and withdrawal gas.

The published 14-20% range is the decision anchor

For most users, Gamma's management charge takes between 14% and 20% of the trading fees earned by a vault. Each vault has one applicable rate within that range, so the relevant number is the rate attached to the position being considered. A 6-percentage-point difference reduces the LP's retained share from 86% to 80% of earned fees.

The fee base matters. A $10,000 deposit is not charged $1,400 or $2,000 merely for sitting in a vault. If that liquidity produces 100 units of trading fees, Gamma's share is 14 to 20 units. Token price changes, range losses, and changes in asset composition affect the position separately. That distinction keeps Gamma fees separate from the wider economics of concentrated liquidity.

There are two direct cost channels for the depositor: the percentage removed from earned trading fees and gas for wallet-signed transactions. Gamma states that its LP vaults have no deposit or withdrawal caps. A missing cap does not remove the required token ratio, ERC-20 allowances, available wallet balance, or network fee.

Gamma vaults versus a self-managed Uniswap position

A Gamma vault exchanges part of its earned fees for automated range management and compounding. A self-managed Uniswap v3 position has no Gamma manager charge, yet its owner chooses ranges, collects fees, rebalances liquidity, and pays for each signed operation.

The structures also differ. Gamma's classic Uniswap v3 and Algebra Finance strategies divide liquidity between 2 positions: a base range and a limit range. Its Uniswap v4 MultiPosition designs support as many as 20 positions. A conventional self-managed Uniswap v3 range is represented by 1 non-fungible position, while a Gamma vault issues fungible ERC-20 shares representing a proportional interest in the managed vault.

That comparison is economic, not merely technical. A Gamma vault must generate enough additional gross fees, save enough user-paid transaction costs, or remove enough management effort to justify its percentage. QuickSwap vaults on Polygon PoS illustrate the same decision through Algebra-based concentrated liquidity: automation has a price even when wallet gas is inexpensive.

Who receives each slice of vault fee income?

The Gamma vault fee path has four economic stages: the trader, the DEX pool, the Gamma protocol, and the vault LP. A swapper first pays the pool's configured trading fee. Only liquidity active at the traded price earns its proportional share. If the underlying DEX has activated its own protocol fee for that pool, its accounting occurs before the vault recognizes the amount attributable to its liquidity.

Uniswap v3's four widely used fee tiers - 0.01%, 0.05%, 0.30%, and 1.00% - map to tick spacings of 1, 10, 60, and 200, respectively. The chosen tier sets the charge on each swap; volume, active liquidity, and Gamma's range placement determine how many fee units reach the vault. A 1.00% pool does not automatically earn more than a 0.05% pool because trade flow and the vault's active share remain decisive.

Gamma then deducts the vault's 14-20% management share from earned fees. Gamma's fee system allocates protocol revenue, with GAMMA stakers receiving a portion of fees generated across managed vaults. The remaining 80-86% belongs economically to vault LPs and is compounded into the managed position. The number of ERC-20 vault shares in a wallet does not rise during compounding; each share represents a larger proportional claim on the vault assets.

Turning the percentage into transparent arithmetic

A Gamma fee calculation begins with gross trading fees, then subtracts the manager percentage and user-paid gas. The compact expression is LP fee income = gross vault fees × (1 − Gamma rate) − wallet gas. Token amounts must be converted to one common accounting unit at the time being evaluated.

Assume a position earns exactly 100 fee units. At a 14% vault rate, Gamma receives 14 units and the LP keeps 86. At 20%, Gamma receives 20 units and the LP keeps 80. If the LP's approvals, deposit, and withdrawal together cost another 5 units, the final fee contribution becomes 81 units at the lower rate or 75 units at the higher rate. The 5-unit gas assumption is hypothetical; actual gas is set when transactions execute.

The same arithmetic establishes a useful hurdle. Before gas, a vault charging 14% must earn 16.3% more gross fees than an otherwise identical self-managed position to leave the LP with equal fee income. A 20% charge raises that hurdle to 25%. Those ratios compare fee production only. They do not count token-price exposure, impermanent loss, incentive rewards, or a person's time spent maintaining ranges.

Comparisons should use the same starting assets and observation window. Gross fee APR from one interface cannot be placed beside net realized fees from another without adjustment. Annualized rates also magnify short samples, so the underlying fee units provide a cleaner audit trail than a projected percentage.

Gas belongs outside the management percentage

On-chain gas is a separate Gamma cost paid for each wallet-signed state change. The documented dual-token path uses 3 transactions when both allowances are absent: 2 ERC-20 approvals and 1 vault deposit. A later deposit needs only 1 transaction while sufficient allowances remain. Withdrawing the Gamma LP shares requires another transaction.

Rewards add their own steps. Staking an LP token without an existing allowance requires 1 approval and 1 staking transaction. Unstaking or claiming also changes on-chain state. These costs do not increase Gamma's percentage, but they reduce the depositor's realized fee income. Automated rebalances are executed by Gamma's strategy infrastructure and do not request a new wallet signature from every LP.

Ethereum transactions under EIP-1559 contain 2 pricing components: a base fee and a priority fee. The base fee is burned, while the priority fee compensates the block proposer. At maximum block usage, Ethereum's base fee rises by no more than 12.5% from one block to the next. The final charge still equals gas used multiplied by the effective gas price, so a contract deposit costs more gas than a basic asset transfer.

Chain selection changes the variable portion. Ethereum, Arbitrum, Optimism, and Polygon PoS all charge for execution, while Arbitrum and Optimism transactions also reflect the cost of publishing rollup data to Ethereum. The durable comparison is transaction count and contract path; the live comparison is the wallet's quoted network fee immediately before signing.

Who absorbs the fee model most efficiently?

During normal operation, Gamma's fee model fits an LP who values automated concentration, expects meaningful fee production, and plans to remain deposited long enough to spread entry and exit gas across many earned-fee events. The case strengthens on lower-cost networks and in vaults whose ranges remain productive. Small, short-lived deposits face a harder hurdle because fixed transaction steps consume a larger fraction of their earnings.

Normalize every candidate vault before choosing one:

• Record the exact Gamma percentage assigned to the vault.
• Identify the underlying DEX and its pool fee tier.
• Separate gross trading fees from the LP's post-management amount.
• Count missing approvals, the deposit, and the eventual withdrawal.
• Keep incentive tokens outside the trading-fee comparison.

Zapper, DeBank, and block explorers help reconstruct balances and transactions, while the vault contract exposes the definitive on-chain events. Gamma rebalances appear as Rebalance events, and fee-compounding activity appears through ZeroBurn events in its dual-position system. Reviewing both prevents a rising share value from being mistaken for a growing share count.

The decision reduces to retained fee production. Use 80-86% of earned vault fees as the starting income, subtract the wallet's full transaction budget, and compare that amount with the cost and effort of managing concentrated liquidity directly. This keeps the quote grounded in assets the position actually earned (explained in practice ).