STBL Peg Index
STBL Peg Index Program.
The STBL Peg Index is a staking contract which accepts STBL / USDC NanoSwap LP Tokens as collateral. The STBL Peg Index pays rewards in both STBL and ALGO.
STBL rewards are paid at a fixed rate APR that changes as a function of the STBL to USDC exchange rate. When the STBL to USDC exchange rate is at 1, the contract pays a max APR of 15.3%. When the exchange rate moves from 1, the APR falls, first quickly (to 9.6% at 0.99 and 1.01), then more slowly to (to 4.4% when trading below 0.95 and above 1.05).
This incentive structure was selected as it encourages liquidity providers to help keep STBL on peg in order to maximize their staking rewards. The long-term staking APR of the STBL Peg Index is to be decided and will dependent upon a number of greater market forces, but in the near-term Algofi intends on maintaining the peak STBL staking rewards at 15.3%.
The ALGO reward APR is floating and is also a function of the STBL to USDC exchange rate. These distributed ALGOs are part of the Algorand Foundation Aeneas liquidity program. The ALGO rewards are paid out at a rate of 0.005 ALGO per second which annualizes to 157,680 ALGO distributed per year. Similarly to STBL rewards payout, ALGO rewards pay a maximum when the STBL to USDC exchange rate is $1. As the STBL exchange rate deviates from $1 the floating ALGO reward falls according to the ratio of the current STBL staking APR to the maximum.