Deposits
Specification, not deployed. The model below is the intended replacement for the fixed deposit APR and is not live on either network.
Supplying USDG to the loan pool earns a variable rate set by utilisation rather than by the operator. Utilisation is borrowed / (borrowed + available): at U = 0 nothing is lent and depositors earn nothing, and at U = 1 every deposited dollar is out on loan and no depositor can withdraw.
Borrow rate
A two-slope curve with a kink at target utilisation. Below the kink the rate is R_0 + (U / U*) × S_1; above it, R_0 + S_1 + ((U − U*) / (1 − U*)) × S_2, where R_0 is the base rate at zero utilisation, U* is the kink, S_1 is the slope below it and S_2 the slope above.
| Parameter | Value |
|---|---|
R_0 base rate |
0% |
U* target utilisation |
70% |
S_1 slope below kink |
10% |
S_2 slope above kink |
60% |
| Reserve factor | 15% |
Supply rate
Depositors receive R_borrow × U × (1 − reserveFactor). Idle capital earns nothing.
| U | Borrow | Supply |
|---|---|---|
| 0% | 0.00% | 0.00% |
| 25% | 3.57% | 0.76% |
| 50% | 7.14% | 3.04% |
| 70% | 10.00% | 5.95% |
| 80% | 30.00% | 20.40% |
| 90% | 50.00% | 38.25% |
| 95% | 60.00% | 48.45% |
| 100% | 70.00% | 59.50% |
The jump between 70% and 80% prices borrowers out and pulls depositors in as withdrawable capital runs short.
Accrual
Interest accrues to a global index rather than to each depositor's balance: index_new = index_old × (1 + R_supply × Δt / year) and balance = shares × index. A deposit mints shares at the current index and a withdrawal burns them, so interest accrues without a per-depositor write.
Example
The pool holds 1,000,000 USDG with 800,000 lent out, so U = 80%. The borrow rate is 0% + 10% + ((0.80 − 0.70) / 0.30) × 60% = 30.00% and the supply rate is 30.00% × 0.80 × 0.85 = 20.40%.
A depositor holding 10,000 USDG of shares earns 20.40% annualised while utilisation stays at 80%. If borrowers repay and utilisation falls to 50%, the same deposit earns 3.04%. The rate changes on every deposit, withdrawal, origination and repayment.
Fixed loan rates
The borrow rate is variable; an individual loan is not. A rate is quoted from the curve at origination and fixed for that loan's term, because repricing a live fixed-term loan would make a borrower owe more than they signed for. Pool yield therefore varies with both current utilisation and the mix of rates in the existing book.
Withdrawal risk
Deposits are withdrawable on demand. Loans are not callable before maturity. At high utilisation there is not enough available capital for all depositors to withdraw, and a depositor waits for borrowers to repay or for new deposits to arrive. The kink discourages that state without preventing it.
Collateral is a physical item in vault custody. A default returns an item, not cash.
The reserve factor accrues to a buffer against defaults where seized collateral sells for less than the outstanding repayment. It is not insurance and is not sized for a correlated fall in resale prices.