ReserveLending Proposal: Stablecoin Interest Rate Model (IRM) Adjustment Proposal — June 2022

Residual Token, Inc.
4 min readJun 15, 2022



Working Title: IRM Proposal — June 2022

Draft — For Discussion Purposes Only

Last update: June 15, 2022

The following proposed changes are ordinary in nature based on current market rates offered by competitor platforms. The ReserveLending platform is performing well even in current market conditions, and we continue to monitor the industry and our own protocol usage for unusual activity.

In accordance with ReserveLending user loan agreement terms and conditions, the unFederalReserve team is proposing the following changes to the ReserveLending protocol interest rate model (“IRM”). The proposed changes will be made for our collateral factor, supply and borrow interest rates, and to our reserve factor on DAI, USDC and USDT.

The parameter proposal seeks to balance out market conditions while incentivizing greater borrowing. This article will briefly cover and outline those changes and why we think this will be the best course of action for the platform moving forward.

1.Collateral Factor: Collateral Factor is the percentage of value that one is able to borrow against their total supply value. Looking at historical price data, we recommend an increase to a 90% collateral rate moving forwards on our DAI,USDC and USDT stablecoins. This higher collateral rate will help protect accounts current positions from volatility of asset prices, and protect accounts from liquidations. This assumption is based on Gauntlet’s simulation risk report done on the Compound protocol. (

2.Interest Rates: The supply APY rate is the rate of return earned by users supplying assets on the RL platform. The borrow rate is the rate at which user are charged for borrowing assets off the RL platform. Based on market observations, radical departures, higher or lower, than observed market rates at common utility levels do not provide an incentive to use the RL platform. Therefore, by adjusting the IRM parameters, we hope to increase engagement without adding additional risk to the current suppliers and borrowers.

The following borrow and supply interest rate schedule adjustments are proposed, accordingly. The lower borrow rates, generally, should encourage more loan origination. Of course, this change means the supply rates would move lower relative to today’s rates at current utilizations. The IRM is a jump rate model, and at higher utilizations, industry leading supply APYs will exist. Broadly speaking, suppliers will still benefit from competitive APY% rates and borrowers will benefit with a much lower APY% after these changes, if approved, are implemented.

3.Reserve Factor: The reserve factor is the percentage revenue the platform earns from its borrowers based on current borrow APYs and outstanding balances.. We propose lowering reserve factors to offset some of the impact caused by the IRM changes mentioned above. This change will give more back to the suppliers on the platform, and still maintain a healthy operational rate for the company. Reserve factors are proposed to be lowered from 25% to 15% on DAI, USDC, and USDT stable coins.

Below we have a set of tables for each stable coin outlining the new changes made to each asset and what the schedule will look like across different utilization rates. Baseline utilization rates are not current but taken from the protocol before suspension was issued on these stablecoins.

Table I: Proposed Adjusted Rates

Vote in the snapshot (Links)

uneRSDL (new)

uneRSDL (legacy)



If approved by vote, these changes will go into effect subsequent to the Trail of Bits audit being finalized.


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Residual Token, Inc.

Permissionless lending and borrowing software, regulatory and operational consulting