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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