Skip to main content
Interest increases the accounting value of vault shares. Lenders realise that value when a withdrawal is funded and claimed, or through a recovery claim. Interest is not paid out periodically.

The Lender Rate

The borrower’s base rate and the protocol fee are applied to the same interest base: Lender net rate = borrower base rate − protocol fee. For example, a 12% base rate and a 1% protocol fee produce an 11% lender net rate. The fee is one percentage point of the interest base. It is not 1% of the interest earned. If the interest base stays at 100,000 USDC for seven days, the lender accrual at an 11% net rate is approximately: 100,000 × 11% × 7 ÷ 365 = 210.96 USDC. This example excludes rounding, penalty interest, and changes to the interest base. Actual accrual depends on the facility’s rates and accounting state. The rates for a facility are set in the schedules to its agreements, and they are not fixed platform-wide. Rates in this documentation are annual rates.

The Protocol Fee

The fee is the protocol’s revenue, for the account of the borrower’s portfolio. It accrues at the same time as lender interest. The Issuer’s right to collect accrued fees ranks behind lenders. Fees cannot be collected at a time, or to an extent, that would leave a matured lender claim unpaid.

When Interest Accrues

The vault accrues interest from the moment capital is deposited, including while it remains undrawn. Interest is simple within an accounting period. The amount on which interest is calculated is updated at each epoch boundary when withdrawal requests are funded or whenever a deposit is made. Interest accrued in one period therefore earns interest in later periods, so a stated annual rate differs from the effective annual yield. The frequency of on-chain accounting updates does not change the interest earned. A withdrawal is paid in two steps. Once a request has passed its notice period and the vault holds enough cash, the vault sets that cash aside for the withdrawal and retires the shares. The lender then collects the cash. Shares waiting in the withdrawal queue keep earning interest until the borrower funds the vault to fulfil the requests, or until the interest cutoff that follows a termination. Funded requests don’t accrue interest.

Penalty Interest

If withdrawal requests have passed their notice period and the vault does not hold enough cash to pay them, and the shortfall lasts beyond the grace period, a penalty rate applies in addition to the base rate. It applies to every lender position in the vault, including shares waiting in the withdrawal queue. Penalty interest accrues to lenders in full. No protocol fee is taken from it. The Note Subscription Agreement provides the same: penalty interest collected from the borrower passes through to every note in the portfolio pro rata, and is not retained by the Issuer, the SPC, or Axcess. See Delinquency and Termination.

Rate Changes

An authorised manager can schedule a new base rate. It takes effect at the start of the second epoch after the current one. A change scheduled during epoch 10 takes effect at epoch 12. The interval gives lenders notice of the change. A lender that submits a withdrawal request during the interval is not guaranteed to exit before the new rate applies, because payment depends on funding. Shares that remain unfunded earn the new rate from its effective date. Changes to the protocol fee and the penalty rate take effect when they are made and apply only to later accrual. The two-epoch delay applies to the base rate only. The Note Subscription Agreement provides the same timing. The Issuer gives notice of a coupon-rate change through the platform. A change that follows a change to the borrower’s base rate takes effect at the start of the second epoch after the epoch in which the notice is given, and a change to a fee applies only to return accruing after it is made.