Skip to main content
Learn

How Does the ‘Interest Rate’ Mechanism in Some Stablecoins Help Maintain the Peg?

Adjusting the stability fee/interest rate discourages minting when the price is low and encourages it when the price is high to manage supply.
Greeks.Live23.11.25

How Does the ‘Interest Rate’ Mechanism in Some Stablecoins Help Maintain the Peg?

The system can dynamically adjust the interest rate (or 'stability fee') charged to users who mint the stablecoin. If the stablecoin price is too low, the rate is increased, discouraging new minting and encouraging burning/redemption.

If the price is too high, the rate is lowered, incentivizing new minting and increasing supply.

How Do Arbitrage Opportunities Help Maintain the Price Peg of a Synthetic Asset?
How Does an Algorithmic Stablecoin Maintain Its Peg?
How Does the “Orphan Block” Mechanism Discourage Fee Sniping?
What Is the Mechanism That Maintains the ‘Peg’ of an Algorithmic Stablecoin?

About

Contact

Editorial Policy

Terms of Service

Privacy Policy

Cookie Policy

© 2025 Greeks.Live

All Rights Reserved

Greeks.Live RFQ

Build by Noo on Engine

Source: The content on this website is produced by Greeks.live's proprietary analysis systems, which utilize advanced Large Language Models (LLMs). This information might not be subject to a full human review before publication and may contain errors.
Responsibility: You should not make any financial decisions based solely on the content presented here. We strongly urge you to conduct your own rigorous due diligence and to consult a qualified, independent financial advisor.
Purpose: All information is intended for informational purposes only. It should not be construed as financial, investment, trading, or any other form of professional advice. News and data are not trading signals.
Risk: The cryptocurrency, derivatives, and options markets are highly volatile and carry significant risk. By using this site, you acknowledge these risks and agree that Greeks.live and its affiliates are not responsible for any financial losses you may incur.