Interest Rates

The Hyperstable system knows two separate interest rates: Base Interest Rate Together, all Collateral Types form the backing for $USDH, but not all Collateral Types are created equally. I.e. some have a higher intrinsic (rebased) yield than others. The purpose of the base rate is to balance the composition of $USDH's backing collateral by managing inflows at the Vault level. Global Interest Rate In short: $USDH below peg, means Global rate up and vice versa. The Global rate is zero when demand for $USDH in the market is greater than the supply. In other words, the rate is zero when $USDH is trading at or above peg. The global rate is a multiplier on the Vault specific interest rate, which means the global rates affect the Collateral Types with the highest Base Rate, which tends to be the riskier collateral, the most. Discount on Interest For Borrowers, holding vePEG acts a rebate on their interest. Depending on the size of their Interest relative to ownership of vePEG, borrowers can achieve a discount, pay zero interest or even Earn while borrowing, as 100% of revenue from interest and liquidation fees flow to PEG lockers.