How does 10% interest on SD work?

One thing I've been wondering for a while now -- where does the 10% interest on Steem Dollars come from? Who pays it? How often is interest compounded (daily, monthly, etc)? I thought I also remember hearing something about the interest rate being changeable. Does that mean there's a chance the rate could be less next year, month etc?

Appreciate any help with this and sorry if it's been asked/explained already.

Thanks! Oh and happy Steem day! :)