> For the complete documentation index, see [llms.txt](https://docs.42.space/llms.txt). Markdown versions of documentation pages are available by appending `.md` to page URLs; this page is available as [Markdown](https://docs.42.space/getting-started/protocol-mechanics-101/fees.md).
# Fees
42 applies a **protocol fee of 0.4% on trades** which serves as the core source of protocol revenue, and **0.2% on platform fees**. Fees are only incurred when users mint or redeem Outcome Tokens (OTs).
This protocol fee is separate from network gas fees, which are also paid in BUSDT from the proxy wallet during transaction execution.
### Mint Fee
For Mint transactions, the fee is calculated directly on the trade notional collateral deposited in exchange for the OT.
#### Formula
* **M** = Gross collateral from the mint
* **f** = protocol fee rate
$$
MintFee = M × f
$$
{% hint style="info" %}
**Example:**\
\
Given a mint size of **100 USDT**, the total fees (protocol and platform) will amount to $$100 \text{ USDT} \times 0.6% = 0.6 \text{ USDT}$$
{% endhint %}
### Redeem Fee
Redeems first apply a **redeem tax** (refer to [Redeem Tax Explained](/getting-started/protocol-mechanics-101/42-outcome-tokens/market-discovery-pre-resolution.md#redeem-tax-explained)). The protocol fee is then charged on the **remaining collateral**.
#### Formula
* **R** = gross collateral from the redeem
* **τ** = redeem tax rate
* **f** = protocol fee rate
$$
Redeem Fee = R × (1 − τ) × f
$$
{% hint style="info" %}
**Example:**\
\
Given a redeem size amounting to 100 USDT in gross collateral and redeem tax rate of 5%, the total fees (protocol and platform) will amount to $$100 \text{ USDT} \times (1-0.05) \times 0.6% = 0.57 \text{ USDT}$$\
\
\&#xNAN;*\*Note: This ensures the protocol fee is only applied to the **net collateral returned from the pool**, not the taxed portion.*
{% endhint %}
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