Once live, all mStable assets will be able to earn a native interest rate. This is done by the lending of underlying bAssets on decentralised lending markets such as Compound or AAVE. As interest accrues, new mAssets are minted and sent to the mStable Savings Contract. Users who opt into receiving interest by depositing a mAsset balance into the contract recieve these newly minted mAssets.
As there will always be a portion of circulating mAssets being used as a medium of exchange, held offline, or not deposited in the Savings Contract for some other reason, the interest earnt on mAssets will be (at a minimum) the average yield of those assets across multiple lending markets.
At this stage, we are building on Compound and AAVE, but this can be changed in future to include new platforms or to remove platforms deemed unsuitable. Lending platforms will be decided by Governance. A current list of platforms used by mStable is below:
A basket with a total value of 1000 mUSD, comprised of equal parts DAI, USDC, USDT, and TUSD bAssets earns interest at the following APY:
DAI - 8%
USDC - 6%
USDT - 4%
TUSD - 5%
A user deposits 100 mUSD into the Savings Contract, alongside others who have already deposited 400 mUSD. The savings contract has a total of 500 mUSD (50% of mUSD supply) in it, and over the course of 6 months accrues interest.
At the end of 6 months, assuming no bAssets have breached their max weights, the basket is comprised of the following: 260 DAI, 257.5 USDC, 255 USDT, and 256.25 TUSD. In total, the basket has accrued 28.75 USD in interest at an average rate of 5.75% APY.
Our user, having contributed one fifth of the total USD in the savings contract over 6 months, earns a corresponding 5.75 mUSD in interest, at an effective APY of 11.5%.