Rate Determination

Rate Determination

Because USDX is not backed by fiat cash, the federal funds rate is not an implicit liability when determining borrow rates for the OCDP positions as the yield was not being earned before the USDX was minted. Many other variables persist, however:

• Macroeconomic Factors such as inflation, mortgage-backed-security (MBS) demand, and the overall economy.

• Loan Type & Term can range from 1st lien to 2nd lien with fixed or variable rates holding durations of up to 30 years.

• Borrower Qualifications including credit score, loan-to-value ratio (LTV), debt-to-income ratio (DTI), loan amount, occupancy & property type.

• Property Qualifications like habitability, disaster zoning, surroundings, and other factors are taken into consideration.

These factors are further influenced by the demand and usage of stablecoins, the crypto markets, and real estate trends at both a local and macro level.

However, real estate borrow rates are consistently lower than crypto borrowing rates.

Real Estate Provides Cheaper Capital

According to Aave in March 2025, the average stablecoin borrowing APR from their protocol on the Ethereum network was 9.66% over the past year. Both the 30-year fixed and 15-year fixed US mortgage rates were more than 150 basis points (1.5%) below that every week of the same time period. More than that, the HELOC, 15-year Home Equity Loan, and 10-year Home Equity Loan rates were lower than that stablecoin borrow rate for the same time period except for a single day in September 2024 where the HELOC rate was higher.

LTV Matters

The loan-to-value ratio (LTV) of deposits matters when determining the borrow rate. LTV and risk increase are positively correlated. Stable does not consider the LTV of the USDX borrowed from Stable, but the LTV of all outstanding debts and liens on any given property when determining the rate paid by the borrower.

Base Considerations (Example)

LTV Range	Rate Adjustment
0-40%	+0%
40-60%	+1%
60-80%	+2%

Here are the current HELOC rates by LTV for $100,000, $250,000 and $500,000 loans. LTV is much more impactful on the rate than the amount borrowed.

Fixed and Range Rates Opportunity

Until now variable borrow rates have been the standard within crypto markets, and for good reason, the demand for capital one day may be half of the demand the day prior. Decentralized finance enables these demand-sensitive swings that have provided a huge benefit to incentivizing and capitalizing on demand. This causes unsustainable volatility that is currently not compatible with assets such as real estate or the intentions of borrowers posting real estate as collateral, however.

Real estate borrowers are familiar with fixed rates and variable window rates where if they don’t know their exact rate they at least know the minimum and maximum rate their loan will fall within. Stable extends that benefit to crypto and decentralized capital markets for all types of borrowers.