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

# Hearth fee earning

> The 1% Hearth taker fee goes to CD yield; LP income is pool trading P&L.

## Protocol flat fee

Every Hearth fill applies a **1% flat fee** (`HEARTH_FEE_BPS = 100`) on trade notional, paid by the **taker**, split **70/30**:

```
gross = user_notional
paid  = gross × (10000 − 100) / 10000   // taker receives the fee-adjusted output
fee   = gross − paid                     // 70% → CD yield, 30% → maker rebate
```

The 70% share is debited from the pool reserves into the HEAT-denominated `cdHearthFeeAccumulator` and minted into the CD yield vault (`CD_APY_POOL`) at the epoch boundary. The 30% maker rebate goes to the auction maker (or stays with LPs when the pool is the counterparty). The consumed XFG side of conversions is burned 50/50 (Eternal Flame / SWF).

## What LPs should expect

| Item          | Reality                                                                                                                                                             |
| ------------- | ------------------------------------------------------------------------------------------------------------------------------------------------------------------- |
| Income source | The pool’s trading P\&L: the taker’s fee-adjusted pricing leaves the fee-adjusted spread in reserves, plus reserve appreciation. No separate spread-reward formula. |
| Flat fee      | LPs do **not** earn the 1% flat fee — it goes to the CD yield pool                                                                                                  |
| Share         | Proportional to your LP share of the pool, realized on withdrawal                                                                                                   |
| Independence  | Separate from **atomic swap** fee routing (69/11/20)                                                                                                                |

## What CD holders get from Hearth

The Hearth flat fee accrues toward **CD yield** plumbing (`cdHearthFeeAccumulator` → epoch mint → `CD_APY_POOL`). Holding HEAT CDs participates in that stream together with the CD share of **atomic swap** fees. The LP income is LP-only; CD holders do not share it.

## Wrong numbers to ignore

Older docs and strategy notes sometimes say:

* “0.3% to LPs” as the Hearth fee — **incorrect for live `HEARTH_FEE_BPS`**
* “LPs earn the Hearth flat fee” — **incorrect**; the 1% flat fee goes to CD yield, LPs earn pool P\&L
* “LPs earn a spread reward `|fill.price − P_clear| × amount`” — **outdated**; that belonged to the retired in-band matcher
* “80% of swap fees to CDs” — **outdated**; atomic swap split is **69/11/20**

Always prefer `src/CryptoNoteConfig.h` and the consensus fee split code.