🌊Reserve Stability Pool

Reserve Assets consist of fiat currency received for the purpose of minting Parabol’s stablecoins. In line with the regulation of Asset Referenced Tokens, reserve assets are invested in Treasury Bills. While Treasury Bills themselves are considered risk-free instruments, the management of the portfolio of these assets can cause a maturity mismatch since stablecoins are redeemable on demand.

The Reserve Stability Pool (RSP) is a specially designed mechanism which helps Parabol manage its Reserve Assets in a maturity matched manner. Parabol stablecoin holders can make permissionless bilateral loans to the RSP at a maturity of their choosing. Removal of the stablecoins from redeemable circulation for the duration of the loan allows Parabol to match the duration of its Reserve Assets at a granular level as opposed to the target duration method employed by other fiat-backed stablecoins; thereby creating the highest level of resiliency in the industry.

The RSP constantly broadcasts the Marginal Market Rate (MMR) at which it is willing to borrow. The MMR is a floating rate with a floor (i.e. a fixed component) that is determined by the total utilisation of stablecoins lent to the RSP as well as the risk-free rate.