> For the complete documentation index, see [llms.txt](https://hyperstable.gitbook.io/docs/llms.txt). Markdown versions of documentation pages are available by appending `.md` to page URLs; this page is available as [Markdown](https://hyperstable.gitbook.io/docs/protocol/interest-rates.md).

# Interest Rates

Interest charged to borrowers is based on the following components:\
\
**1: Vault Utilization Rate**\
**2: Peg Rate** \
**=**\
**3: Total Interest Rate**\
\
1: **Vault Utilization Rate**\
Hyperstable uses Morpho's AdaptiveCurve interest rate model at the vault level, which is engineered to maintain the ratio of the borrowed asset (USH) over the supplied asset ([Collateral](/docs/protocol/collateral-types.md)), close to a preselected target. When the (vault specific) Collateral Ratio is above the set target, the interest rate automatically trends towards zero.\
\
2: **Peg Rate**\
The purpose of the peg based interest rate is to manage supply and demand for USH and keep the stablecoin trading at $1. If USH is trading above $1, the interest rate is lowered. If USH is trading below $1, the interest rate is raised. Just like the vault collateralization Rate, under normal circumstances (when USH trading at or above $1, aka at ''peg''), the peg rate trends towards zero.

**3: Total Interest Rate**\
The total interest charged to borrowers is the sum of the above.