When RD moves off $1
RD's $1 target is supported by incentives, not a promise that every trade clears at exactly $1. The protocol responds over time, and the market can remain above or below the target while it does.
| Market price | Protocol response | What you may notice |
|---|---|---|
| Below $1 | Buying RD to redeem can become attractive; the borrow rate may rise. | Borrowing can cost more, while Stability Pool RD interest may increase. |
| Above $1 | The borrow rate may fall, making new RD cheaper to mint. | Borrowing can cost less, while Stability Pool RD interest may decrease. |
| Away from $1 for a long time | Par may move slowly as a backstop. | Redemption terms or borrowing headroom may change. |
These are incentives, not automatic trades. A response depends on market activity and valid price readings. For a short explanation of the three mechanisms, see How RD stays near $1.
If you hold RD
You can hold or trade RD like another token. After the launch bootstrap period, you can also redeem it for collateral, not dollars, subject to fees, a quota, and the redemption rules. Redemption can support RD's price when it trades low, but it is not an instant cash-out guarantee. See Redemption.
Holding RD alone does not earn interest. If you want RD rewards, see Earn RD.
If you borrow RD
The borrow rate can change as RD's market price changes, so the cost of keeping debt open is variable. Normal redemptions can reduce the collateral and debt of troves without Redemption Shield; Redemption Shield prevents this in normal operation at a higher borrow rate. A branch shutdown has separate redemption rules.
You do not have to predict the controller's next step to borrow, but you should leave room for a higher rate and keep your collateral ratio healthy. See Borrow rates and Collateral shutdown.
If stress lasts
Par may move, but it does not replace the $1 target or set the price at which you trade RD. It changes the protocol's internal valuation, which affects redemption and borrowing. The movement is bounded and automated; no admin can set it by hand.
For the precise limits, timing, and oracle requirements, see Peg control. The RD Market Oracle explains where the controller's market reading comes from.