How it works

Maker Dai Savings Rate (DSR) accrual and Borrower's payments are rebalanced by cFRA contract as a layer above MakerDAO. The borrower's collateral is locked in the regular Maker vault.

In the diagram

* Current Maker rate is 9%

* The Lender receives 7% DSR (minus fees)

* The Borrower pays 7% Stability Fee (plus fees).

The 2% excess rate paid by Maker is "channeled back" to the Lender, compensating his debt accumulation. When DSR (and SF) changes, the will rebalance the flows (including change of difference flow) leaving the borrower-lender rate at 7% again. 

Rate transformation

Borrower's Vault (collateral) is used as an amortizer  to rebalance the flows. 

* High DSR: proceeds above FRA are injected into the Vault (dark semicircles). 

* Low DSR: complemented by extractions from the vault (light semicircles). 

Contract Lifecycle

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