# 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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