Standard Model
Standard Model is used for markets that have relatively lower historical utilization (typically below 80%). Under the standard model, here are how the rates are calculated:
Borrow rate: Base Rate + (Multiplier x Utilization Rate)Supply rate: Borrow Rate x Utilization Rate x (1 - Reserve Factor)whereBase Rate = The minimum (floor) borrowing rateMultiplier = Scale factor per utilizationUtilization Rate = Asset borrowed / Total asset supplyReserve Factor = Percentage of spread between supply & borrow (the protocol's revenue to be kept in treasury)
From the formula, we can see that Utilization Rate is the only dynamic parameter, whereas Base Rate, Multiplier, and Reserve Factor are determined as “constant”.
Last modified 1yr ago