Lender Interest Rate

All open borrows on JUICE pay a lending rate (APR) back to the lending liquidity pool. This APR fee is distributed pro-rata to all lenders. The interest rate model is shown in the image below and the parameters for the model are described in the rest of this document. The interest rare curve

Model Overview

The lending APR is variable for all open and new loans. The variable rate is dependent on pool utilization as shown in the curve above. As utilization increases, the borrow rate increases. As utilization approaches 100% the borrow rate increases at a faster pace.

The interest rate curve is split in 3 parts. There is a Base Borrow Rate that sets a minimum borrow rate for the protocol. After a certain point, the borrow rate increases by the Borrow Rate Slope 1. After exceeding the Optimal Utilization Rate the rate increases by an additional Borrow Rate Slope 2 amount (i.e. the new slope is the sum of slope 1 and slope 2).

Given the current utilization rate of the lending pool, it calculates the borrow rate and liquidity rate. Interest rate curve has the following parameters:

• Optimal Utilization Rate

• Base Borrow Rate

• Borrow Rate Slope 1

• Borrow Rate Slope 2

Interest Rate Model Parameters

These are the current parameters for the Interest Rate Model as of 2023-04-14 and are the parameters shown in the chart above.

Parameter	Values
Optimal utilization rate	80.00%
Base borrow rate	7.50%
Borrow rate slope 1	35.00%
Borrow rate slope 2	80.00%

Interest Rate Model

Liquidity risk materializes when utilization of available USDB is high, and this becomes more problematic as "U" gets closer to 100%. To tailor the model to this constraint, the interest rate curve is split in two parts around an optimal utilization rate $U_{optimal}$. Before $U_{optimal}$the slope is small, after it begins rising.

Utilization	Interest Rate
5%	7.50%
10%	7.50%
15%	7.50%
20%	7.80%
25%	9.75%
30%	11.70%
35%	13.65%
40%	15.60%
45%	17.55%
50%	19.50%
55%	21.45%
60%	23.40%
65%	25.35%
70%	27.30%
75%	29.25%
80%	31.20%
85%	37.15%
90%	43.10%
95%	49.05%
100%	55.00%