> For the complete documentation index, see [llms.txt](https://docs.resupply.finance/llms.txt). Markdown versions of documentation pages are available by appending `.md` to page URLs; this page is available as [Markdown](https://docs.resupply.finance/resupply-protocol/savings-reusd.md).

# Savings reUSD

Savings reUSD (**sreUSD**) is a growth-oriented vault that allows long-term holders of **reUSD** to earn sustainable yield directly from the protocol’s weekly revenue. It is implemented as a standard ERC-4626 vault with auto-compounding mechanics, which means that depositors continuously accrue yield without the need for lockups, cooldown periods, penalty fees, or separate reward tokens. Yield is sourced from total protocol revenue and is distributed directly to stakers.

The introduction of **sreUSD** is designed to strengthen the stability of **reUSD’s** peg while creating new opportunities for integrations within the broader DeFi ecosystem. A dynamic interest-rate mechanism adjusts borrowing costs based on how closely **reUSD** tracks its peg. When the peg is stable, borrowing rates are lower, reducing fees to the base level. When **reUSD** trades below peg, borrowing rates increase up to a defined threshold. This additional revenue collected during periods of peg stress is funneled directly into **sreUSD**. 

## Key Features

* Standard ERC-4626 vault with auto-compounding **reUSD** yield
* Yield is sourced from total weekly protocol revenue and streamed to vault depositors
* No cooldowns, lockups, or penalties
* No emissions or extra reward tokens
* Native LayerZero bridging support

## Peg-Based Dynamic Interest Rates

A new interest rate calculator has been deployed across all **reUSD** pairs. It includes `priceWeight` multiplier that adjusts borrowing rates based on how closely **reUSD** tracks its peg:

* Interest will continue to be calculated based on underlying lending interest, **sfrxUSD** interest, and a constant **2%**
* `priceWeight` is used to determine how much of the underlying interest or sfrxusd interest should be used as fees. Previously, this was a flat **50%**. Going forward it will be a range between **50%** (on-peg) and **60%** (off-peg).
* As the **reUSD** peg approaches **1.00**, interest rates decrease back to the base **50%** of underlying/sfrxusd interest rates.
* As the price falls below peg, rates increase to a max of **60%** of underlying/sfrxusd interest rates.
* The rate adjustment is bounded by configurable min/max thresholds (ie. How much of the underlying/sfrxusd rates should be charged as fees)

This mechanism increases fees during periods of peg instability. The additional revenue it creates is distributed as yield to **sreUSD**.

#### Example:

At the conclusion of epoch X:

* the time-weighted price of **reUSD** was **$0.992**
* **sfrxUSD** yield was **10%** and was higher than all underlying lending rates
* **80k reUSD** was collected via interest
* **20k reUSD** collected via redemptions

This means the effective interest rate during this period was **58%** of sfrxUSD, or **5.8%** (**5% base + 0.8% off-peg**). This allows us to compute the following two components:

1. base interest fees (**5%**): **\~68.96k**
2. off-peg fees (**0.8%**): **\~11.03k**

Therefore **11.03k reUSD** is immediately allocated to **sreUSD** and the remaining **68.96k** interest fees + **20k** redemption fees are pooled and split according to the ratios above.

In this example, the final distributions would be as follows

| Destination    | Amount                                 |
| -------------- | -------------------------------------- |
| Staked RSUP    | 62.27k                                 |
| sreUSD         | 24.37k (13.34k + 11.03k)               |
| Insurance Pool | 8.89k                                  |
| Treasury       | 4.44k                                  |
| **Total**      | \~100k (80k interest + 20k redemption) |


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