# Stability and Yield

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The Stability and Yield Mechanism outlined on this page, **have not yet been activated** and will only be implemented upon the official launch of the Full Version 1 System, as specified in the [Technical Roadmap](/technical-roadmap.md).
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### Stability Fee

* The **Stability Fee** is an annual percentage yield applied to the PHT generated from a vault, similar to the interest paid for collateralizing digital assets and borrowing PHT.
* Paid in **PHT**, the Stability Fee contributes to the APACX Protocol's reserves, ensuring that the protocol has sufficient resources to maintain the peg.

### PHP Peg Maintenance

To maintain the peg of PHT to PHP, the APACX Protocol employs dynamic stability fee adjustments based on market conditions. The protocol uses a Proportional-Integral-Derivative (PID) controller model, which fine-tunes the stability fees during various market cycles.

**Key Stability Adjustments:**

* **Market Demand for PHT:** Stability fees are adjusted based on changes in demand for PHT.
* **PHP-USD Exchange Rate Volatility:** Fluctuations in the exchange rate between PHP and USD prompt adjustments in the stability fee.
* **Collateral Risk:** Risk factors associated with the asset type of collaterals backing PHT are also considered.

### Protocol Surplus Buffer

* Stability fees collected over time are stored in a risk reserve or surplus buffer.
* This reserve ensures system stability by providing a cushion in case of market stress or volatility.
* Surplus funds are gradually distributed to maintain the protocol's balance.

### PHT Yield Rate **(PYR)**

The **PHT Yield Rate (PYR)** allows PHT holders to earn yield by locking their PHT in a designated contract. This mechanism serves two purposes: providing an incentive for holding PHT long-term and helping maintain the peg to PHP.

**PYR and Stability Mechanisms:**

* **Above Peg:** If PHT trades above the 1:1 peg (greater than 1 PHP), the protocol may lower the PYR or increase stability fees to reduce demand and bring the price back to the peg.
* **Below Peg:** If PHT trades below the peg (less than 1 PHP), the protocol may increase the PYR or decrease stability fees to encourage demand and restore the peg.


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