> For the complete documentation index, see [llms.txt](https://docs.clipper.exchange/llms.txt). Markdown versions of documentation pages are available by appending `.md` to page URLs; this page is available as [Markdown](https://docs.clipper.exchange/~/changes/Pe3DAbObJ7vk3hibsPW0/introduction/how-dao-protocol-fees-work.md).

# How DAO Protocol Fees Work

Clipper adds a small spread (\~10bps) on each trade, of which 100% goes to the DAO as Protocol Fees.

More precisely, this is measured by summing the positive difference between Clipper input and output on swaps, according to on-chain price oracles. This is fully verifiable on-chain, so LPs don’t need to take anyone’s word for it.

Effectively, the spread generates excess returns over and above the [Daily Rebalancing Portfolio](/~/changes/Pe3DAbObJ7vk3hibsPW0/introduction/how-lp-returns-work.md) benchmark ("Benchmark Outperformance").  Note that this structure means **LPs only pay fees if they actually profit.** This is a big difference from other AMMs, which charge a fee on trades even If it loses money for LPs. You can track benchmark outperformance [here](https://clipper.exchange/data/benchmark).

DAO Protocol Fees are published by [Token Terminal](https://tokenterminal.com/terminal/projects/clipper/financial-statement) and are also publicly auditable [on-chain](https://etherscan.io/address/0xD8Cc0304de58fCE5147796606Db14500d94b5EF2?ref=blog.clipper.exchange).

The blog includes a thoughtful post on [how to Maximize DAO Protocol Fees](https://blog.clipper.exchange/dao-protocol-fees/).