Core Concepts

Parabol is a permissionless lending protocol that enables lenders to earn secure, predictable yields tied directly to U.S. Treasury Bills and overnight repo markets.

Reserve Stability Pool

The Reserve Stability Pool (RSP) is the backbone of Parabol’s lending system, ensuring asset stability by precisely matching asset maturities. Users lend paraUSD into the RSP for specific durations, removing those tokens from active circulation until maturity.

This exact duration matching provides unmatched stability compared to traditional stablecoin reserves, which typically rely on broader target durations.

Key features:

• Flexible maturities: Users choose their loan durations.

• Transparent Rates: RSP broadcasts a real-time Marginal Market Rate (MMR), consisting of:

  • Total utilisation of stablecoins lent to the RSP
  • The risk-free rate

Each rate is associated with a validation interval timestamp, ensuring users always have access to the most accurate and up-to-date rates. This API facilitates seamless integration, allowing partners to fetch essential financial data to support their operations.

Interest Accrual Mechanism

Parabol offers a dual-yield structure, combining guaranteed fixed returns with additional floating-rate earnings.

1. Fixed Income

Fixed income forms the foundation of Parabol’s yield structure. When users lend their assets, they are guaranteed a predetermined return based on the chosen maturity date and the corresponding T-Bill rate.

This fixed yield is set at the time of lending and remains constant throughout the lending period, providing stability and predictability for lenders.

Fixed income is calculated at the time of claiming the position, after the maturity date has passed.

Fixed Income = (principal * coupon * (maturityTimestamp - lendTimestamp)) / (10000 * 31104000)

Where:

• principal: The amount lent by the user (in wei format)
• coupon: The fixed yield rate (in basis points)
• maturityTimestamp: The Unix timestamp of the maturity time
• lendTimestamp: The Unix timestamp of the lending time
• 31104000: The number of seconds in a year (360 days)

Simulation

2. Floating Income

Floating income is a variable return that users can earn in addition to their fixed income. It’s derived from the performance of the overnight repo market and provides an opportunity for lenders to increase their overall returns.

Floating income is calculated using:

• Lend Day Income
• Maturity Day Income
• Remaining Days Income

Floating income is calculated and updated at 09:10 UTC every day.