> ## Documentation Index
> Fetch the complete documentation index at: https://docs.mouth.app/llms.txt
> Use this file to discover all available pages before exploring further.

# Fee Model

> How Mouth charges fees and generates revenue.

## Protocol Fee

Mouth charges a **2% fee on the total pot, collected immediately when the opponent deposits**.

The fee is sent to the Mouth treasury at deposit time — not at resolution. This means funds in the escrow contract are always net of fees.

### When Is the Fee Collected?

* **PvP (1v1)**: The 2% fee on the total pot is collected the moment the Opponent deposits. Both deposits are locked, and the fee is transferred to treasury immediately.
* **Open PvP**: The fee is collected **proportionally** as each opponent deposits. Each deposit triggers a fee transfer for that opponent's share of the total pot.

### Fee Calculation

| Scenario                  | Challenger             | Opponents (total) | Total Pot | Fee (2%) | Collected When            |
| ------------------------- | ---------------------- | ----------------- | --------- | -------- | ------------------------- |
| PvP 1v1                   | \$500                  | \$500             | \$1,000   | \$20     | Opponent deposits         |
| Open PvP fully filled     | \$1,000                | \$1,000 (3 users) | \$2,000   | \$40     | As each opponent deposits |
| Open PvP partially filled | \$1,000 → \$700 active | \$700 (2 users)   | \$1,400   | \$28     | As each opponent deposits |

**Example (Open PvP, 3 opponents):**

* Challenger deposits \$1,000
* Opponent A deposits \$400 → fee on matched portion: 2% of \$800 = \$16 → treasury
* Opponent B deposits \$350 → fee on matched portion: 2% of \$700 = \$14 → treasury
* Opponent C deposits \$250 → fee on matched portion: 2% of \$500 = \$10 → treasury
* Total fee collected: \$40 (2% of \$2,000 total pot)

### Mutual Cancellation

If both parties agree to cancel an active bet, each party receives their remaining deposit back (fee was already collected at deposit time). **No additional fee** is charged for mutual cancellation — the standard 2% has already been deducted.

### When Fees Are NOT Charged

* **Bet not accepted** — Challenger withdraws before any opponent deposits, no fee
* **Expired bet** — Acceptance deadline passes with no fills, Challenger reclaims, no fee
* **Open PvP unfilled portion** — The Challenger's unfilled amount from a partially filled Open PvP Bet is returned with no fee

### Why 2%?

* Lower than most PvP betting platforms (typically 3-5%)
* Collected upfront at deposit time — simple and transparent
* Competitive enough to prevent users from doing OTC bets outside the platform