InterestRateCalculator

Interest Rate Model
Taker’s interest rate algorithm is calibrated to manage liquidity risk and optimise utilisation. The borrow interest rates are derived from the Utilisation Rate UUU
.
​UUU
 is an indicator of the availability of capital within the pool. The interest rate model manages liquidity risk in the protocol through user incentives to support liquidity:
When capital is available: low interest rates to encourage borrowing.
When capital is scarce: high interest rates to encourage repayments of debt and additional supplying.
Borrow Interest Rate
Liquidity risk materialises when utilisation is high, and this becomes more problematic as UUU
 gets closer to 100%. To tailor the model to this constraint, the interest rate curve is split in two parts around an optimal utilisation rate UoptimalU_{optimal}Uoptimal​
. Before UoptimalU_{optimal}Uoptimal​
the slope is small, after it begins rising sharply.
The interest rateRtR_tRt​
follows the model:
​ifU≤Uoptimal:Rt=R0+UtUoptimalRslope1if \hspace{1mm} U \leq U_{optimal}: \hspace{1cm} R_t = R_0 + \frac{U_t}{U_{optimal}} R_{slope1}ifU≤Uoptimal​:Rt​=R0​+Uoptimal​Ut​​Rslope1​
​
​ifU>Uoptimal:Rt=R0+Rslope1+Ut−Uoptimal1−UoptimalRslope2if \hspace{1mm} U > U_{optimal}: \hspace{1cm} R_t = R_0 + R_{slope1} + \frac{U_t-U_{optimal}}{1-U_{optimal}}R_{slope2}ifU>Uoptimal​:Rt​=R0​+Rslope1​+1−Uoptimal​Ut​−Uoptimal​​Rslope2​
​
​UUU
, the utilisation ratio
​UoptimalU_{optimal}Uoptimal​
, the optimal utilisation ratio
​RtR_tRt​
, the borrow interest Rate
​R0R_0R0​
, the base borrow interest rate
​Rslope1R_{slope1}Rslope1​
, the rate slope 1
​Rslope2R_{slope2}Rslope2​
, the rate slope 2
Supply Interest rate
The borrow interest rates paid are distributed as yield for Token holders who have supplied to the protocol, excluding a share of yields sent to the ecosystem reserve defined by the reserve factor. This interest rate is generated on the asset that is borrowed out then shared among all the liquidity providers. The supply APY is:
​St=URt(1−F)S_t = U R_t(1-F)St​=URt​(1−F)
​
​UUU
, the utilisation ratio
​RtR_tRt​
, the borrowt interest rate
​FFF
, the reserve factor
Model Parameters
bluechip
growth
Parameters
Value
Optimal Utilisation ratio
45%
Base Borrow Rate
0
Rate Slope 1
4%
Rate Slope 2
300%
Reserve Factor
10%
Parameters
Value
Optimal Utilisation ratio
45%
Base Borrow Rate
0
Rate Slope 1
4%
Rate Slope 2
300%
Reserve Factor
10%
implement
Calculate deposit and borrowing rates using the total deposit amount, total borrowing amount, and reserve factor.
  function calculateInterestRates(
    uint256 totalLiquidity,
    uint256 totalDebt,
    uint256 reserveFactor
  ) external view override returns (uint256 depositRate, uint256 borrowRate) 
call params
Name
Type
Description
totalLiquidity
uint256
the total liquidity in ETH.
taotalDebt
uint256
the total debt in ETH.
reserveFactor
uint256
reserve factor. It represents the proportion of interest earned on loans that is retained by the protocol as a reserve.
return value
Name
Type
Description
depositRate
uint256
deposit rate
borrowRate
uint256
borrowing rate

Parameters	Value
Optimal Utilisation ratio	45%
Base Borrow Rate	0
Rate Slope 1	4%
Rate Slope 2	300%
Reserve Factor	10%

Parameters	Value
Optimal Utilisation ratio	45%
Base Borrow Rate	0
Rate Slope 1	4%
Rate Slope 2	300%
Reserve Factor	10%

Name	Type	Description
totalLiquidity	uint256	the total liquidity in ETH.
taotalDebt	uint256	the total debt in ETH.
reserveFactor	uint256	reserve factor. It represents the proportion of interest earned on loans that is retained by the protocol as a reserve.

Name	Type	Description
depositRate	uint256	deposit rate
borrowRate	uint256	borrowing rate

Last modified 4mo ago