diff --git a/contracts/lending_pool/src/flash_loan_receiver.rs b/contracts/lending_pool/src/flash_loan_receiver.rs
index 83d2fd0..4815750 100644
--- a/contracts/lending_pool/src/flash_loan_receiver.rs
+++ b/contracts/lending_pool/src/flash_loan_receiver.rs
@@ -15,7 +15,7 @@ pub trait FlashLoanReceiver {
     /// # Arguments
     /// * `env` - Soroban environment
     /// * `amount` - Borrowed amount (must repay fully)
-    /// * `fee` - Flash loan fee (0.08% = 8 bps)
+    /// * `fee` - Flash loan fee (0.05% = 5 bps)
     /// * `params` - Caller-provided params (user data)
     ///
     /// # Panics
diff --git a/contracts/lending_pool/src/lib.rs b/contracts/lending_pool/src/lib.rs
index acd37d9..a2401e9 100644
--- a/contracts/lending_pool/src/lib.rs
+++ b/contracts/lending_pool/src/lib.rs
@@ -4,10 +4,10 @@ use soroban_sdk::{contract, contracterror, contractimpl, contracttype, token, Ad
 pub mod flash_loan_receiver;
 pub use flash_loan_receiver::FlashLoanReceiver;
 
-/// Flash loan fee in basis points (8 bps = 0.08%)
+/// Flash loan fee in basis points (5 bps = 0.05%)
 /// This fee compensates Liquidity Providers for temporary risk exposure
 /// while generating additional protocol revenue.
-const FLASH_LOAN_FEE_BPS: i128 = 8;
+const FLASH_LOAN_FEE_BPS: i128 = 5;
 
 #[contracterror]
 #[derive(Copy, Clone, Debug, Eq, PartialEq, PartialOrd, Ord)]
@@ -431,7 +431,7 @@ impl LendingPool {
         if amount < 0 {
             panic_with_error!(&env, Error::MathOverflow);
         }
-        // amount * 8 / 10000
+        // amount * 5 / 10000
         amount
             .checked_mul(FLASH_LOAN_FEE_BPS)
             .and_then(|v| v.checked_div(10_000))
@@ -442,7 +442,7 @@ impl LendingPool {
     /// `amount + calculate_flash_fee(amount)` to be returned before callback returns.
     /// 
     /// # Flash Loan Fee & LP Share Value
-    /// A fee of 0.08% (8 bps) is charged. Fees stay in pool reserves, increasing LP share value.
+    /// A fee of 0.05% (5 bps) is charged. Fees stay in pool reserves, increasing LP share value.
     /// 
     /// # Callback Interface
     /// Receiver must implement [`FlashLoanReceiver`] trait:
diff --git a/contracts/lending_pool/src/tests.rs b/contracts/lending_pool/src/tests.rs
index 7dcfde1..43e41bb 100644
--- a/contracts/lending_pool/src/tests.rs
+++ b/contracts/lending_pool/src/tests.rs
@@ -254,21 +254,21 @@ use crate::mock_flash_receiver::MockFlashReceiverClient;
         let contract_id = env.register(crate::LendingPool, ());
         let client = LendingPoolClient::new(&env, &contract_id);
 
-        // 10000 * 8 / 10000 = 8
-        assert_eq!(client.calculate_flash_fee(&10000), 8);
+        // 10000 * 5 / 10000 = 5
+        assert_eq!(client.calculate_flash_fee(&10000), 5);
         
-        // 5000 * 8 / 10000 = 4
-        assert_eq!(client.calculate_flash_fee(&5000), 4);
+        // 5000 * 5 / 10000 = 2
+        assert_eq!(client.calculate_flash_fee(&5000), 2);
         
         // Zero amount
         assert_eq!(client.calculate_flash_fee(&0), 0);
         
-        // Large amount: 1_000_000 * 8 / 10000 = 800
-        assert_eq!(client.calculate_flash_fee(&1_000_000), 800);
+        // Large amount: 1_000_000 * 5 / 10000 = 500
+        assert_eq!(client.calculate_flash_fee(&1_000_000), 500);
         
         // Max limit consideration: using i128, large amounts won't overflow
         let large_amount: i128 = 1_000_000_000_000_000;
-        assert_eq!(client.calculate_flash_fee(&large_amount), 800_000_000_000);
+        assert_eq!(client.calculate_flash_fee(&large_amount), 500_000_000_000);
     }
 
     #[test]