HERO “Interest”/Capital Gains


Please note that even though HERO does technically not pay interest, the HERO is supposed to appreciate in value by a certain percentage every year. From an economical point of view, the HERO itself, however, does not increase in value, but the underlying collateral is required to grow in value by +5% a year. Given the market mechanisms describe in the peg, the HERO is also supposed to grow in value by +5% (in USD terms) a year. please read the Disclaimer.

Instead of obtaining additional tokens to holders of HERO accordingly (one might think dividends) - the number of HEROs in the account-, the valuation of the HERO grows constantly. This means that if you hold HERO for one year, the HERO will be valued at 5% more, but the actual number of HEROs you own stays constant. For tax, this results in capital gains and not in additional income as if there where dividends or tokens paid as interest.

As a consquence, HERO pays no compound interest!

The intend of the HERO is to offset some of the inflation of the U.S. dollar.

The HERO’s annual interest rate to offset to USD is:

+5%   (1913/12/23 - today)

Back in 1913, the Federal reserve was founded and the U.S. Dollar was value at $1. According to the yearly interest rate of HERO, the current valuation of one HERO is:

$155   (2017/05/08)

A year from that, it will be $155 + 5% ~ $163.

As described in the FAQ, this interest is paid by the shorters of HERO, ensured by a distributed price feed.