# Interest Rate Models

### Overview

Tectonic adapted a variable interest rate model, popular with other DeFi Money Market protocols in the market (such as Compound and Aave), where the rates are largely determined by the supply and demand of assets, represented by its Utilization rate.

Furthermore, the computation of interest rates is separated into two stages, **Standard model** and the **Jump (Kink) model**, to further incentivize / disincentive supplying and borrowing activity.

### Parameter Initialisation

Parameters described in the following sections will be set by Tectonic’s team at the start, by taking into account the competitive positioning of Tectonic with regards to other lending protocols in the market.&#x20;

All the lending parameters will be subjected to the community’s voting once the Tectonic’s governance process is established.

Specific parameters like collateral ratios for each token can be found in the [Supported Tokens](money-market-parameters) section
