Interest Rates & Distribution
Documentation pertaining to the calculation, publication and distribution of Interest Rates generated by Reflect DeFi Strategies.
Simple Explanation of Reflect Interest Rates
Reflect Money interest rates are calculated in real-time by onchain programs and are based entirely on the level of productivity of the chosen defi strategy. For example: a lower risk - lower productivity strategy would be real-world asset rates such as treasuries aggregation in which the (%) is calculated by the increase in price of the underlying assets.
The distribution method of the above model is based entirely around price appreciation, while other models may distribute cash as a method of returning yield to eligible users.
Distribution Mechanics
Yield or ‘Interest Rates’ are calculated and distributed as often as possible; _wherever productivity can be captured, it will be captured. _This is a permissionless process and happens entirely onchain.
Price Appreciation
Some DeFi strategies simply payout by increasing the receipt price over time to match the corresponding amount of assets within its collateral and or rewards pool. Similar to how LST(s) increase in value.
More redeemable assets = higher receipt price.
Liquid Bonds
Liquid Bonds are simply Tokens representing a pool of productive capital, such as sUSDR or sUSDX in the case of Reflect Money. These Liquid Bonds benefit from Price Appreciation and the ability to unwrap and claim this appreciation in cash at any moment.
Distribution User Flow
Below you can visualise the ideal user flow for those who seek to go straight to capturing Interest Rates through strategic stablecoins.
Going from non yield-bearing stablecoins to yield-bearing stablecoins is completely optional, dependent on your jurisdiction you may want to seek legal counsel before opting to do so.