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# Ribor

Ribor, the Rebus Inter-Blockchain Offer Rate, is a reference rate that is constructed from the daily yield offered by total $REBUS staking. The Ribor fills the role of rate indices, like Libor, used by banks in managing instruments tied to traditional FIAT currencies. For Rebus, this means platform partners have a rate at which they can build DeFi instruments (or products) tied to a respective Ribor.

# Intended Audience

This section is intended for development teams building instruments or products tied to $REBUS and are already familiar with the role of rate indices. For more information regarding the role of rate indices, read here.

# How does it work?

From Investopedia “a reference rate is an interest rate benchmark used to set other interest rates.”

Ribor mimics the function of commonly used reference rate indices, like Libor and Euribor, but in a way that works for respective DeFi instruments.

In Tradfi, several bonds (e.g., floating rates bonds) have interest linked to the LIbor or Euribor.

For example Goldman Sachs can issue a bond that will pay to the subscriber an interest of Libor 6 month + 1% every 6 months. So every six months they check the value of Libor 6-month and define the interest to be paid. For example the index at that date can have a value of 2% so the final interest will be 2% + 1%.

Goldman Sachs floating rate bond: Reference rate is 3M USD Libor + 1.75% per annum
Morgan Stanley floating rate bond. Reference/Base Rate is Libor + 1.22%

Another example would be a variable interest rate offered on a home loan. The interest paid is equal to the prime, or reference rate, plus a fixed amount, called the spread. An adjustable rate mortgage (ARM) may have a prime rate of 5% + 1%. So the borrower’s payment fluctuates up or down with the prime rate changes, but the bank can always count on the spread rate of 1%.

Ribor follows this concept but against specific DeFi cryptocurrencies to arrive at reference rates for each specific coin:

  • $REBUS → Ribor Reb
  • $ATOM → Ribor Atom
  • $OSMO → Ribor Osmo
  • $EVMOS → Ribor Evmos