Interest Rate Curve

Fenture utilizes Aave’ s interest rate model which is calibrated to manage liquidity risk and optimise utilisation. The use of the protocol determines the rate automatically.

Interest Rate Parameters

• $U_{optimal}$: $U$(Utlisation Rate) is an indicator of the availability of capital within the pool. The optimal utilisation rate U optimal split the interest rate curve into two parts to manage liquidity risk in the pool.

• Base Variable Borrow Rate

• Variable Rate Slope 1

• Variable Rate Slope 2

Interest Rate Model

$$if U<U_{optimal}:R_t=R_0+\frac {U_t} {U_{optimal}} R_{slope1}$$

$$if U ≥ U_{optimal}:R_t=R_0+R_{slope1}+\frac {U_t-U_{optimal}} {1-U_{optimal}} R_{slope2}$$

When $U < U_{optimal}$ ​, the borrow interest rates increase slowly with utilization.

When $U ≥ U_{optimal}$, the borrow interest rates increase sharply to incentivize more deposit and avoid liquidity risk.