# Stability Fees

Ratio Finance prides itself on giving its users the most capital efficient loans against yield bearing collateral. This has led to USDr becoming one of the most utilized “Collateralized Debt Positions” for leverage, with 97% of minted USDr being sold for yield bearing assets to redeposit into **app.ratio.finance****. **Because of this, USDr has consistently floated below $1 on the open market. Previously, there had been no incentives for our users to pay back debt unless they recognize an arbitrage opportunity (i.e when USDr is trading at $0.97) or are close to liquidation.

The introduction of Stability Fees brings with it mechanisms that will not only benefit the Ratio Protocol but also our users.

Stability fees are equivalent to Interest Rates, and are implemented to help defend the peg. When a user mints USDr from a specific vault, our applied calculation will determine at which rate the user’s debt accrues.

Stability fees are calculated based on the current price of USDr and are applied **daily**. The percentage is calculated as (**1 - $USDr)/100 (and 0% if $USDr is greater than $1)***.* As such, if the price of USDr is .99, interest rates would be 1%. This is done in order to promote the stability of the peg, and encourage users to pay back debt when USDr is off peg. When USDr is perfectly on peg, there are** no interest rates**, incentivizing users to mint more USDr. When a user pays back debt, the interest fees are paid first.

There is also a dual incentive for our users to provide their USDr as LP, because not only will they benefit from rewards but the more LP there is, the lower the slippage — meaning the lower the interest rates.

### The formula for the total stability fee is:

At 12:00 AM UTC everyday, the mean price of USDr during the previous day is calculated. The mean is a rolling average over 24hrs with 30 minute intervals used. Based on the formula, the interest fee is added to the debt. The interest owed is based on the principle that is in the account at 12:00 AM UTC. Users can see in real time what the interest rate is, as the front-end shows the interest rate as a rolling average price of USDr over 30 min intervals.

Furthermore, Ratio plans to introduce * real yield* to the Ratio token. In the near future,

**ALL**interest generated will be used to

**buyback**$RATIO. The purchased $RATIO will be distributed and auto-compounded for

**Ratio Stakers.**More information will be released about the exact mechanics soon.

By introducing these fees, we aim to **increase the stability of the peg, generate ****real yield**** **for** **Ratio Stakers**, **and** create a healthier ecosystem.**

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