> For the complete documentation index, see [llms.txt](https://docs.usdd.io/llms.txt). Markdown versions of documentation pages are available by appending `.md` to page URLs; this page is available as [Markdown](https://docs.usdd.io/system-architecture/regarding-the-dynamic-apy-pricing-mechanism.md).

# Regarding the Dynamic APY Pricing Mechanism

To ensure the long-term stability and sustainability of the protocol, the USDD team has adopted a "Dynamic APY Pricing Model" for interest rate evaluation and adjustment. The calculation of the Base APY primarily considers the following core factors:

* Crypto Market Benchmark Reference: Continuously monitoring the 7-day moving average yield of mainstream, high-quality yield-bearing stablecoins in the crypto market to serve as the industry baseline.
* Federal Reserve Rate Reference: Incorporating traditional finance risk-free rates (such as the US Federal Reserve target rate) into consideration, ensuring the Base APY remains above traditional market benchmarks to safeguard users' baseline returns.
* Market Competitive Premium: Building upon the dual benchmarks mentioned above, maintaining a competitive premium to ensure the provision of market-competitive returns for users.
* Underlying Yield and Healthy Balance: Taking into account the actual comprehensive return on investment of the protocol's underlying assets, maintaining the overall interest rate within a healthy range while safeguarding capital efficiency, thereby achieving long-term sustainability.