Sustainability
The 5% APR is funded by the protocol’s reserve surplus and excess collateral margin. It is not sourced from external revenue, token emissions, or speculative yield strategies.
Reserve Surplus
All CDP-minted stablecoins are secured by a minimum 117% ETH collateral ratio (from the 85% max LTV). All Direct Swap minted stablecoins are backed 1:1 by USDC, USDT, or ZCHF sitting in the contract. The protocol consistently holds more in reserves than it owes.
The savings yield operates within this surplus. The 5% savings yield is funded from this collateral surplus. Because the protocol holds significantly more than it owes, it can sustain a conservative yield without compromising its reserves.
Supply Growth
The 5% rate applies only to staked stablecoins, not total supply. In practice, most stablecoins circulate outside of Savings: in wallets, LP pools, trading, or as collateral in other protocols.
| Staking Rate | Annual Supply Growth |
|---|---|
| 50% staked | 2.5% |
| 40% staked | 2.0% |
| 30% staked | 1.5% |
At typical staking rates of 30-40%, annual supply growth is roughly 1.5-2%.
Structural Demand
Multiple protocol-level mechanisms generate continuous demand for stablecoins, counterbalancing supply growth:
- CDP loan repayments remove stablecoins from circulation
- Direct Swap redemptions charge a 0.5% fee on every exit
- Liquidations require stablecoins to execute, removing debt from the system
- Buyout arbitrage creates sustained buy pressure during depegs
For enCHF specifically, the 0.5% redemption fee is burned entirely rather than donated, creating stronger deflationary pressure.
Rate Calibration
The rate is calibrated to long-term sovereign benchmark yields. The US 30-year treasury has historically ranged around 4-5%. For CHF, this rate is well above Swiss benchmark rates, which have historically been near zero, making the enCHF savings rate particularly competitive.
Why Fixed
A variable rate would require governance or an automated controller. ENNI has neither. The rate is permanently set at the contract level. This is a deliberate design choice: predictability over optimization.
Market dynamics handle the rest. If ETH drops significantly, borrowers repay debt (reducing supply). If confidence shifts, savers withdraw (reducing the staking rate and therefore supply growth). The system self-adjusts without intervention.