Why make the tokens interest-bearing?

Why make the tokens interest-bearing?

An increasing number of central bank interest rates are near-zero or negative. This makes it impossible to maintain 1:1 pegged tokens, as a safely managed reserve (ie. government bonds and bank deposits) would diminish over time.

We want to offer a user experience similar to a savings account. The underlying interest on the reserve, be it positive or negative, will be passed on to the user sans the 1% annual markup.

This markup is the revenue source from issuing the tokens. We are not relying on transactions fees or similar to sustain our business. This makes our tokens ideal for Cosmos, where they can move around freely between zones.

We believe that building a long-term business around assumptions on interest rate levels is unsustainable. Our prediction is that many USD-backed tokens will be highly distressed if interest rates drop further.

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