Interest rate and delegation

Your rate is a property of your position, like your collateral. You write it when you open, and it does not move unless you move it.

Choosing a number

Any value from the tier floor up to 100%. Interest accrues linearly between touches of your position and is capitalised into your debt each time you touch it. It is minted as it accrues and sent straight to the Stability Pool of your branch — which is why total fyUSD supply equals total debt plus bad debt plus PSM-minted supply, by construction, at every block.

Rules R-5.5.1, R-5.5.3, R-2.1.3

What a low rate costs you

Nothing directly. It costs you queue position. Redemptions walk the branch's positions from the lowest rate upward, so the cheapest borrowers are the first to have their debt repaid at par against their collateral. Being redeemed is not a loss — see Redemption — but it is an unscheduled reduction of a position you wanted to keep.

The interface tells you exactly where you stand: how many positions and how many fyUSD sit ahead of you in the queue, and it warns you when you come within 5% of the front.

Rules R-7.3.1, R-15.1.7, R-15.3

The floor, and why it is not a fixed number

At a reference of 3.6% the Tier 1 floor is 1.8% and the Tier 2 floor is 3.24%. At 6% they are 3.0% and 5.4%. Below a reference of 3% the fixed floors dominate.

The reference market's address is fixed in the constructor and never changes. If reading it reverts, if its supply falls under $10M, if it has not been updated in 30 days, or if fewer than 15 daily samples are recorded, the reference is treated as unavailable and the floor falls back to the fixed value. Failure of the reference makes borrowing cheaper, never more expensive.

The floor exists because a market where everyone borrows at 1.5% pays depositors 1.35%, which is not a product. It is indexed rather than fixed so it tracks the cost of dollars instead of somebody's guess from launch day. Pushing the reference up costs real capital over thirty days and only raises the floor, within its band — there is no way to profit from moving it.

Rules R-5.7.2, R-13.2

The floor never applies retroactively

The one consequence: if your rate is below the current floor and you want to borrow more, the call reverts and you must call setRate first. The interface warns you weekly if your rate has fallen under the floor.

What changing your rate costs

Free, unless your last change was less than 7 days days ago. In that case a fee equal to seven days of interest at the new rate is added to your debt and routed like any other interest.

The cooldown clock starts when you open. There is no cooldown and no fee for anything that reduces your risk.

Rules R-1.1.6, R-5.7.1

Delegation

You can authorise one address to change your rate on your behalf, inside a band you choose:

setDelegate(manager, minRate, maxRate)
clearDelegate()

The delegate can call exactly one function — setRateFor(user, rate) — and only with a rate inside your band and at or above the tier floor. All the normal rules apply and any fee is borne by your position.

The two default managers

The reference interface lists two off-chain services and proposes the first by default when you open a position, with a band of your chosen rate minus 1 point to plus 3 points. There is no on-chain registry of managers and no protocol relationship with either of them.

The listing condition on the reference interface is that a manager publishes its management fee and that the fee is at or under 0.25% of debt a year, paid outside the protocol. The protocol pays managers nothing, and there is no such thing as a private rate.

Rules R-1.6.1, R-5.9.1, R-5.9.2, R-5.9.3

When interest stops

Interest runs in every ordinary state, at every hour. It stops in exactly three circumstances, all automatic and none decided by anyone: after 24 continuous hours of a degraded branch state, at a branch shutdown, and 90 days into Sunset.

Rules R-5.5.5, R-6.9.5, R-12.5.4

Last reviewed: 2026-09-07 · Spec v0.4