Interest Rate Model
Last updated
Last updated
The interest rate in Parallel finance is dynamically determined by the supply and demand. Therefore, the borrow and supply interests could vary in different blocks.
When a supplier deposits an asset to the money market, a certain amount of pTokens will be issued based on the initial exchange rate. The supplier earns interest through the appreciation of pToken's exchange rate.
The utilization rate represents the percentage of borrows in the total money market.
Parallel finance converts a certain portion of borrow interests into reserves. These reserves may be used for incentives, liquidation protection, emergencies, etc.
Parallel Finance implements the jump interest model. When the utilization rate exceeds the kinks, the jump rate will be applied to the excess portion.
If Utilization <= Jump_Utilization,
If Utilization > Jump_Utilization,
Asset
Base_Rate
Full_Rate
Jump_Utilization
Jump_Rate
KSM
2%
30%
80%
14.01%
xKSM
1%
26.21%
80%
10%
USDT
2%
34.21%
85%
4.67%