Interest Protocol Review 2026: USDi and Reserve Risks

Interest Protocol is described as a borrowing and lending protocol with USDi, a stablecoin intended to track USDC at a one-to-one peg. The project says USDi holders receive interest through rebasing.

Its stated model combines fractional reserves and over-collateralized borrowing. The documentation is being updated and includes a Deprecated section, so the protocol’s current availability and operating details are unclear. Fees, collateral terms, and redemption procedures are not published in the documentation shown.

Interest Protocol describes itself as a borrowing and lending protocol that combines fractional reserves with over-collateralized borrowing. These mechanisms can allow a protocol to issue more stablecoin liquidity than collateralized loans alone would support, but fractional reserves also mean not every unit necessarily has an equivalent amount of immediately available backing.

The protocol describes USDi as pegged one-to-one with USDC. Interest is paid to holders through rebasing, a mechanism that adjusts token balances rather than requiring users to claim a separate interest payment. The current documentation does not explain the reserve ratio, collateral rules, or how users redeem USDi for USDC.

Fees and borrowing costs are not published in the project documentation shown. Check the protocol interface and current documentation for any transaction, borrowing, or redemption charges before using the protocol.

The project documentation includes Audits and Security sections, and two audits are listed. Public sources do not identify the audit firms, scope, or findings, so those listings alone do not establish that the current contracts are secure.

USDi’s described combination of fractional reserves and over-collateralization carries smart-contract, collateral, liquidity, and peg risks. The documentation shown does not explain custody, reserve coverage, or redemption under stress. The project’s current operating status is also unclear; verify the active contracts and terms before depositing assets.

Interest Protocol is most relevant to DeFi users evaluating interest-bearing stablecoins and borrowing protocols. It is a poor fit for anyone who needs clearly published current operating terms, reserve mechanics, or redemption details before taking stablecoin risk.