Interest Rate Model
Borrow APR
The borrowing interest rate for assets on UncleSam Finance is calculated using the following formula:
Borrow APR = Base Rate + (Utilization Rate * Multiplier) + max(Jump Multiplier * (Utilization Rate - Kink), 0)
The key variables:
Base Rate: Minimum interest rate set by governance
Utilization Rate: Current protocol utilization level
Multiplier: Interest rate increase per utilization point
Kink: Utilization point where rate increase jumps
Jump Multiplier: Additional interest above kink point
Supply APR
The supply interest rate is determined by distributing accumulated interest paid by borrowers, minus reserves, across all lenders.
Supply APR = {[((1 + Borrow APR)^(1/blocks per year)) - 1] * Total Borrows * (1 - Reserve Factor)} / Total Supply
The compounding supply APR aims to dynamically align lender rewards with protocol growth and usage.
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