· 1 min read
The redemption floor, explained
Why our headline rate is lower than the competition's, on purpose.
Halo Labs
We get asked why the rate is not higher roughly once a week. The answer is a single parameter.
The floor
A fixed share of reserve must sit in instruments that settle same-day. Allocation runs on what is left. Raise the floor and the rate falls; lower it and the rate rises, along with the odds that a busy day turns into a queue.
The trade, stated plainly
Products that quote materially higher rates have either taken more credit risk, more duration risk, or lowered their own floor. All three are legitimate choices. They are just different choices, and the difference only shows up on one kind of day.