π°Interest Rate & Fees
Learn more about interest rates and fees for Flexible Term USD Vaults.
Interest Rate & Fees
The interest rate, known as the Loan Fee Rate, is the annual rate of interest used to calculate the amount of interest payable to the Lender. In other words, this is the annual interest rate accrued by Lenders each day for Loans made to the Borrower (OpenTrade SPC).
Term | Definition | Payable By / To |
---|---|---|
Benchmark Rate | An index rate published by trusted source that track the βrisk freeβ rate of return / cost of overnight lending secured by US Treasury securities. This is currently the Daily Treasury Bill Rates published by the Federal Reserve Bank of New York. | NA |
Loan Fee Rate | The annual rate of interest earned by Lenders for each day their loan remains outstanding. |
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Advisor Fee | A fee charged by the Advisor to cover the costs of advising OpenTrade SPC in buying / selling and managing the portfolio of Loan Collateral. |
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Platform Fee | A fee charged by the Platform Provider to cover the costs of developing and maintaining the OpenTrade Platform and related expenses. |
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Liquidity Fee | Paid to the Platform Provider to cover the cost of providing liquidity as required to ensure interest is payable immediately. |
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Calculating the Loan Fee Rate
The Loan Fee Rate is calculated by subtracting the Benchmark Rate from Fees, where Fees are defined as the sum of the Advisor Fee, Platform Fee, and Spread.
The Benchmark Rate is updated daily at the Withdrawal Cut-Off Time based on the Daily Treasury Bill Rates published by the Federal Reserve Bank of New York. This means the Loan Fee Rate will change in line with any fluctuations in the Benchmark Rate.
Example
Benchmark Rate | Advisor Fee | Platform Fee | Liquidity Fee | Loan Fee Rate |
---|---|---|---|---|
5.25% | 0.10% | 0.20% | 0.20% | 4.75% |
Calculating the Daily Interest Rate
The Loan Fee Rate is transformed into a Daily Interest Rate each day by taking 1 day of the Loan Fee Rate, compounded daily
Example
Where the Loan Fee Rate = 0.0475 (4.75% APR),
This daily interest rate is added to the prior days exchange rate to calculate the exchange rate for the next day.
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