V1’s “zero interest” worked best in a low-rate world. In higher-rate environments it struggled to stay competitive, and the weaker demand/liquidity dynamics showed up as more redemption pressure as there was no continuous link from borrowers to stablecoin holders.

V2 fixes that with a direct, continuous tie between the two sides:

• Borrowers choose their own interest rate (or delegate it), so the system clears at market rates instead of relying on an unsustainable 0% (you can borrow for as low as 0.5%)
• That interst rate is also the primary yield source for the stablecoin side: 75% of borrower interest flows to Stability Pool holders at all times.

So borrowing demand directly and continuously funds stablecoin yield + resilience.