> For the complete documentation index, see [llms.txt](https://docs.dahlia.xyz/llms.txt). Markdown versions of documentation pages are available by appending `.md` to page URLs; this page is available as [Markdown](https://docs.dahlia.xyz/governance-and-fees/fees.md).

# Fees

Dahlia implements a variety of fees that help sustain the protocol, ensure market stability, and incentivize certain behaviors within the ecosystem. Below are the core fees associated with Dahlia markets:

#### Protocol Fee

Applied to each market, deducted from the borrower's APY, and directed to the DAO treasury. 

* **Default:** 5% of the interest rate earned by lenders. 
* **Maximum:** The protocol fee rate is capped at 30%.

#### Reserve Fee

Provides a safety buffer in the event of bad debt. Collected from borrowers and directed to a reserve or insurance buffer.

* **Default:** 0%.

#### Flashloan Fee

Applied whenever users use Dahlia's flashloan functionality. Flashloans allow borrowing without collateral, provided the funds are returned in the same transaction. 

* **Default:** 0%.
* **Maximum:** Capped at 3%.

These fees can be adjusted by governance and are collected to ensure the protocol maintains sustainability, supports development, and provides safety mechanisms for market participants.