Interest Rates
Interest rates apply within the USB Stablecoin Platform as follows:
- Borrowers are charged interest (Stability Fee) on their open positions.
- USB Savers receive interest on the USB tokens they deposit in the USB Savings Pool.
The USB Stablecoin Platform allows the Platform Admin to periodically adjust the Stability Fee (i.e. interest rate) charged to Borrowers so that a balance occurs to economically incentivize Borrowers’ and Stakers’ participation in the platform.
- When there is high Borrower demand, the interest rate they are charged will be algorithmically increased. This will attract more USB Savers to the platform – who will receive a share of the greater interest charges collected from Borrowers.
- When there is low Borrower demand, the interest rate they are charged will be algorithmically decreased. This will attract more Borrowers to the platform.
As a result of this dynamic of automatically balancing interest rates, there is no deterministic fixed interest rate: the market determines the interest rate via the Admin adjustments to the Stability Fee. This allows the Fringe Finance Platform to remain competitive in the crypto economy – since deterministic fixed interest rates would cause the platform to swing into and out of being competitive in relation to other crypto platforms.
However, it is likely that USB Savers will enjoy higher interest rates for their USB stablecoin in Fringe's USB Staking platform as compared to other platforms. This is because the Fringe Finance platform will be a predominant lender for many speculative collateral assets that do not have other well-established lending markets.