Interest Rate

How to calculate supply and borrow rate

Borrow Interest Rate

To calculate Interest Rate:

{Rt=R0+UtUoptimalRslope1,if UUoptimalRt=R0+Rslope1+UtUoptimal1UoptimalRslope2,else\begin{cases} R_t = R_0 + \frac{U_t}{U_{optimal}}R_{slope1},& \text{if } U≤U_{optimal}\\ R_t = R_0 + R_{slope1} + \frac{U_t - U_{optimal}}{1 - U_{optimal}}R_{slope2},& \text{else} \end{cases}
  • UoptimalU_{optimal}: Optimal Utilization - The utilisation rate targeted by asset reserve.

  • R0R_0: Base Borrow Rate - Defines minimum borrow rate.

  • Rslope1R_{slope1}: Rate Slope 1 - Constant representing the scaling of the interest rate versus the utilization, when utilization is below optimal.

  • Rslope2R_{slope2}: Rate Slope 2 - Constant representing the scaling of the interest rate versus the utilization, when utilization is over optimal.

Supply Rate

To calculate Supply APY:

St=UtVt(1Rt)S_t = U_t V_t (1 - R_t)
  • StS_t: Supply Rate - Expected APY.

  • UtU_t: Utilization Ratio - Ratio between borrowed liquidity and total liquidity

  • VtV_t: Interest Rate - Borrow interest rate.

  • RtR_t: Reserve Factor - Protocol fee.

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