Interests

Debt instruments interest is calculated on a fixed or variable rate on the outstanding principal.

The interest rate is the nominal yield paid by the debt instrument on the principal, usually expressed as Annual Percentage Yield (APY).

The D-ASA interest rates MUST be defined in basis points (bps).

Interest Rate

The D-ASA MUST define an interest rate (uint16).

Coupons

Debt instruments can pay interest in periodic installments, called coupons.

Coupons mature in a coupon period, according to a defined coupon schedule.

The D-ASA MUST define the number of total coupons K (uint64):

K>0 if the D-ASA has a defined number of coupons;
K=0 if the D-ASA has zero or undefined (perpetual) coupons.

Coupon Rates

Debt instruments can pay coupons with fixed or variable interest rates.

The D-ASA MAY define the coupon rates as uint16[] array, where:

The length of the array MUST be K, equal to the total coupons;
The K-elements of the array are the coupon rates, expressed in bps.

If the D-ASA has zero or undefined coupons (K=0), the coupon rates array MUST be empty and the interest rate MUST be used instead.

Coupon rates could be derived from the interest rate.

📎 EXAMPLE

D-ASA with 4 coupons with the following rates: 2,00%, 2,50%, 3,00%, and 3,50% would have the following coupon rates array (bps):
uint64[] = [200, 250, 300, 350]

📎 EXAMPLE

D-ASA with zero coupons would have the following coupon rates array (bps):
uint64[] = []

The coupon rates MUST be set using the asset_config method.

Variable Rates

The interest rate MAY be updated using the OPTIONAL update_interest_rate method.

If the D-ASA has coupons, the interest rate MUST NOT be updated if there is any due coupon still to be paid.

The coupon rates MAY be updated using the OPTIONAL update_coupon_rates method.

The updated coupon rates MUST NOT modify past coupon rates.

A reference implementation SHOULD properly restrict the coupon rate updatability.

📎 EXAMPLE

A D-ASA has variable interest rates pegged to an off-chain index. Interest update permissions are granted to an external interest oracle.

📎 EXAMPLE

A D-ASA has variable interest rates based on covenant breaches. Interest update permissions are granted to a trustee in charge of verifying breaches.

Accruing Interest

Debt instruments may accrue interest over time.

The D-ASA units MAY accrue interest, according to the day-count convention (see Day-Count Convention section).

If the D-ASA has coupons, the units accrued interest MUST be calculated with respect to the latest coupon due date.

📎 EXAMPLE

Let's have a D-ASA with 4 coupons. The 2nd coupon is due. The D-ASA units are accruing the interest of the 3rd coupon. The accrued interest is calculated according to the day-count convention, applied to the elapsed time with respect to the 2nd coupon due date.

If the D-ASA has coupons, the account units accrued interest calculation SHOULD fail if it has pending coupon payments.