# Protocol Fees

Here's a high-level breakdown of all the fees featured in Cluster:

## Protocol Fee Structure

### 1. Borrow Fees

Borrow fees are charged when a loan is created, with rates varying from 0.05% to 0.15% depending on the asset class(Dimensions). More info [here](https://cluster.gitbook.io/docs/architecture/dimensions).

### 2. Spread

Spread refers to the difference between the interest rate charged to borrowers and the interest rate paid to lenders. It ranges between 20% and 50% of the interest rate charged to borrowers, depending on the risk/volatility profile of the underlying asset. This difference contributes to the protocol's revenue. For example, with a low-risk asset like USDc, if borrowers pay 10% interest with a 20% spread, lenders receive 8% interest.

### 3. Liquidations

Liquidation fees are charged when a user's position is liquidated due to insufficient collateral. These fees help compensate for the risk associated with undercollateralized loans and incentivize liquidators to maintain the protocol's health.

## Utilization of Fees

The collected fees serve two primary purposes:

1. Propelling the protocol's growth through revenue sharing via [<mark style="color:purple;">**Singularity**</mark>](https://cluster.gitbook.io/docs/architecture/singularity), funding development, and marketing initiatives.
2. Securing long-term sustainability by building reserves and ensuring the protocol can weather market fluctuations.
3. Funding cross-chain liquidity rebalancing transaction fees.

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These fees are subject to change depending on market sentiment or protocol needs. It's important to note that any changes will be chosen via community governance vote.
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