Core Concepts

Parabol Protocol is a permissionless protocol that allows paraUSD lenders to access “risk-free rates and beyond” through a lending mechanism facilitated by the Reserve Stability Pool.

Reserve Stability Pool

The Reserve Stability Pool (RSP) is a specially designed mechanism that helps Parabol manage its Reserve Assets in a maturity-matched manner. Lenders lend paraUSD to RSP for their chosen duration. These loans are removed from circulation until maturity, allowing precise asset duration matching and enhanced stability compared to other stablecoins.

paraUSD holders can make permissionless bilateral loans (using paraUSD) to RSP at a maturity of their choosing. These loans remove paraUSDs from redeemable circulation for the duration of the loan. This process allows Parabol to match the duration of its Reserve Assets at a granular level, unlike the target duration method used by other fiat-backed stablecoins, thereby creating the highest level of resiliency in the industry.

• RSP has a minimum loan limit of 1,000 paraUSD.

• RSP constantly broadcasts the Marginal Market Rate (MMR) at which it is willing to borrow. The MMR is a floating rate with a floor (i.e., a fixed component) that is determined by:

  • 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

Parabol’s yield mechanism is designed to provide users with a combination of predictable returns and potential additional earnings. This dual-yield approach consists of two main components: fixed income and floating income.

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.