Interest Rate Model (Deprecated)
The First-of-its-kind Defi solution that auto rebalances pool based on dynamic interest rate
*Halted since Q2 2022.
The Interest Rate Model opens new opportunities for Platypus users to receive more PTP from their staked assets. This upgrade will automate the rebalancing of liquidity pools through liquidity mining incentives.
Coverage ratio is an important concept in our stableswap. The simplified principle is this: The higher the coverage ratio, the greater the PTP emission is to the stablecoin account. The Interest Rate Model protects against coverage ratio manipulation. Most protocols rebalance their pools based on arbitrage activities. We have invented a new way to rebalance the pool based on PTP emission (interest rate of stablecoins). The new model incentivizes balance across pools, and all users can enjoy stable yields on their deposits.
The natural market movement is an opportunity to receive more PTP from your staked assets. This incentivizes existing LPs to reallocate their liquidity while restoring different stablecoin accounts’ coverage ratios back to 1.
Let’s take this illustration here as an example. You staked 20K USDT on Platypus, and assume the coverage ratio of USDT at the time is lower than USDC. USDC will have a higher APR than USDT. To reiterate, the higher the coverage ratio, the greater the APR.
Liquidity providers can chase better yields by reallocating their deposits. In this case, you may choose to unstake your 20K USDT, swap it for USDC, then stake that 20k USDC on Platypus. Congratulations! Right now, you can enjoy a higher yield on your staked assets.
LPs get incentivized to maintain equilibrium. There is no actual change in the asset level of USDT and USDC, as the respective amounts remain unchanged. But the liability of USDT decreases by 20K through unstaking, while the liability of USDC increases by 20K by staking. Through this market activity, the coverage ratio of USDT increases, and that’s how our LPs help rebalance the pool.
Users will have to migrate funds from the existing contract (a.k.a. old contract) to the new contract.