Lending Protocol Parameters

Borrow Limit (B) - Calculated value

The maximum value that a user can borrow against their collateral.

CR = Collateralization Ratio

$ = Assets (dollar-denominated)

Base Rate ( r ) - Protocol adjusted parameter (currently 0.5%)

The minimum interest rate charged to borrowers.

Liabilities (L)

The sum of all loans for a particular asset, including user-based lending, RePos, and supplying liquidity to DEX.

Assets on Hand (A)

Amount of assets available in the system.

Reserve size (R)

$R = L + A$

Scarcity Ratio (S) - Calculated value

The ratio of asset-specific liabilities relative to asset-specific deposits.

$S = L / R$

Scarcity Rate Target () - Protocol adjusted parameter (current 70%)

A conservative target for scarcity in the system. Once S increases beyond this target, the character of the curve changes. The borrowing rate increases drastically to incentivize additional deposits while discouraging additional borrowing.

can be set by an external ‘oracle’ or parameter.

Rate Growth Factor (g) - Protocol-adjusted parameter

A factor correlated with borrowing rates above. The larger this value, the stronger the incentives to decrease toward

Safe Borrow Rate Max () - Protocol adjusted parameter (4%)

The upper bound of the variable-rate loan prior to breaching. can be set by an external ‘oracle’ or parameter.

Variable Rate ()

The interest rate for a variable-rate loan. Rate is constantly variable in response to the conditions of the system.

The formula must have Safe Borrow Rate Max () and the formula for the second case can be linear or hyperbolic: