# Stability Mechanism

### 1. Cap/Floor collateral value to $1 while minting/redeeming 1 USDs

**Minting** **1 USDs** - If a collateral token is worth less than $1, it will be treated with its actual market price. However, if it is worth more than 1 dollar, it will be treated as $1.

**Redeeming** **1 USDs** - If a collateral token is worth more than $1, it will be treated with its actual market price. However, if it is worth less than 1 dollar, it will be treated as 1 units of collateral at its market price.

Hence, USDs will always be fully collateralized or over-collateralized. For more information on how mint and redeem functions work check out[Minting and Redeeming](/master/minting-and-redeeming.md)

### 2. Redemption Fee

The protocol collects a redemption fee whenever USDs is redeemed. This fee is passed on to the SPA stakers. Redemption fee is levied so that protocol does not work like a free token swap instrument. The fee is static for each collateral token but can be upgraded through governance by the community. It is a percentage of the transaction value.

1. **Mint Fee = 0**
2. **Redemption Fee = x% of the amount of USDs redeemed.** 

x depends on the selected collateral.  Check the current redemption fee for the USDs in [app.sperax.io](https://app.sperax.io/)

### 3. Pause minting USDs with de-pegged collateral 

If the collateral being used to mint USDs has de-pegged by 3% or more to the downside, then the protocol will stop minting USDs using that collateral.

### 4. Auto-yield for USDs holders 

As more people use USDs, the yield rate will serve as a second-layer protection from a high selling pressure, further empowering a mass adoption in various use cases including payment, derivatives, and portfolio construction. For more information on how auto-yield works check out [Auto Yield](/master/auto-yield.md)

### 5. SPA is given on Redemption when sufficient collateral is not available 

When sufficient collateral is not available, USDs redeemers would get $1 worth of collateral in the form of SPA tokens from the treasury. This would be the collateral of last resort.


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