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Peg Stability Module

The Peg Stability Module (PSM) is a critical component of Rheofi Protocol designed to maintain the 1:1 USD peg of rUSD, the protocol's native stablecoin. By enabling direct, low-fee swaps between rUSD and other approved stablecoins, the PSM creates a reliable arbitrage mechanism that stabilizes the rUSD price under varying market conditions.

How It Works​

Users can swap approved stablecoins (such as USDC or USDT) for rUSD at a fixed 1:1 exchange rate, and vice versa. When rUSD trades above its peg, arbitrageurs mint rUSD by depositing stablecoins into the PSM, increasing supply and pushing the price back toward $1. When rUSD trades below peg, users redeem rUSD for underlying stablecoins, reducing supply and restoring the peg.

Key Features​

  • Fixed-Rate Swaps: The PSM guarantees a 1:1 conversion ratio between rUSD and whitelisted stablecoins, subject to a small configurable fee that accrues to the protocol treasury.
  • Governance-Controlled Parameters: Swap fees, supported stablecoins, and individual asset caps are all configurable through governance proposals, allowing the community to adapt the PSM to evolving market dynamics.
  • Supply Cap Enforcement: Each stablecoin within the PSM has a maximum reserve cap, preventing overconcentration in any single asset and maintaining a diversified backing.
  • Transparent Reserves: All stablecoin reserves held by the PSM are fully visible on-chain, enabling real-time auditability of rUSD's collateral backing.

The Peg Stability Module provides rUSD with a robust, market-driven stabilization mechanism — reinforcing confidence in Rheofi's stablecoin ecosystem.