Sturdy V2
  • Overview
    • What is Sturdy?
    • Why use Sturdy?
    • Risk management
    • Liquidations
    • Interest rates
    • Security and audits
    • Sturdy Subnet
  • Sturdy DAO
    • $STRDY
    • Governance
    • Liquidity mining
  • Library
    • Community resources
    • Brand assets
    • Contract addresses
  • V1 docs
Powered by GitBook
On this page
  1. Overview

Interest rates

PreviousLiquidationsNextSecurity and audits

Last updated 1 year ago

Each silo has its own interest rate contract set at deployment. To date, they've all followed a model using following variables:

Utilization: Amount of borrowed funds divided by amount of lent funds

Base Rate: Borrow rate when utilization is 0% (i.e. no funds are borrowed)

Optimal Utilization: A fixed utilization rate

Optimal Rate: Borrow rate when utilization is equal to optimal utilization

Maximum Rate: Borrow rate when utilization is 100% (i.e. all funds are borrowed)

If the utilization rate is less than or equal to the optimal utilization, then

BorrowAPR = Base Rate + Utilization x ((Optimal Rate - Base Rate) / Optimal Utilization)

If the utilization rate is greater than the optimal utilization, then

BorrowAPR = Optimal Rate + ((Utilization - Optimal Utilization) x ((Maximum Rate - Optimal Rate) / (1 - Optimal Utilization)))

Here is a visual representation of this formula (courtesy of ):

Fees

10% of interest paid by borrowers is collected as a fee. The remaining 90% is paid to lenders.

Frax Finance