Interest Rate Model

Lending & Borrowing interest rates
Lending and Borrowing interest rates are calculated due to Utilisation rate
UtilisationRate=TotalBorrow/TotalLendUtilisationRate = Total Borrow / TotalLend
BorrowingRate=rf+2UtilisationRaterfBorrowing Rate = rf + 2*UtilisationRate*rf
  • rf - risk fee free rate: the rate at which #dev DeFi manages to get from other quasi-risk-free protocols.
Borrowing interest rate model uses the Kick parameter which follows a jump rate model.
BorrowingInterestRate=(maxrKick)UtilisationRate/(1Kick)(maxKickrKick)/(1Kick)BorrowingInterestRate = (max - rKick)*UtilisationRate/(1-Kick) - (max*Kick - rKick)/(1-Kick)
Borrowing interest rate model
  • Kick: the point in the model where the rate of increase in Borrowing interest rate with respect to Utilization rate is at a higher rate, the value of Kick point is determined at 80%.
  • rKick - rate at Kick: value of Borrowing interest rate at Kick.
  • Max: maximum value of Borrowing interest rate which is calculated at 100% Utilisation rate
The return to Lenders is determined as:
LendingInterestRate=BorrowingInterestRateUtilisationRateLending InterestRate = Borrowing InterestRate * Utilisation Rate