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

# Fee Distribution

Haircut (swap fee) collected is automatically distributed when its value exceeds `Pool.mintFeeThreshold` during deposit and withdrawal transactions. This value is usually set at a value of about $10 USD. Alternatively, users can call `Pool.mintFee(address token)`, which is supported from V3 pool contracts, to instantly distribute fees.

Haircut is distributed in 3 portions:

* LP dividend: A certain amount of haircut is distributed to LPs, which is determined by `Pool.lpDividendRatio`. The underlying token amount for LPs increases accordingly. The ratio can be checked using `Pool.exchangeRate(address token)`.
* Retention: Some haircut is retained in the tip bucket of the pool. The ratio could be checked by `Pool.retentionRatio`. It can be used to fill the pool if the retention factor drops below 1, or retrieved by the pool owner for other uses.
* Remaining haircut are transferred to `feeTo` address

### Current Allocation

{% hint style="info" %}
The value shown in the above table might be outdated. Please refer to the [smart contract](/developers/contracts.md) for the latest value.
{% endhint %}

Currently, 50% of haircuts are allocated to "LP dividend" and the remaining 50% are allocated to "Retention". For USD+ family of assets, haircuts allocated to "Retention" are transferred to `feeTo` to ensure proper skimming.