interest-rate-mechanism.md

Interest rate mechanism

mrgnlend’s interest rate mechanism uses a 2-piece piecewise function that is configured per asset. It can be expressed as the following:

$$r_{\text{borrow}} = \begin{cases} \frac{x}{o} \cdot pl & \text{if } x \leq o \ \left(\frac{x-o}{1-o}\right) \cdot (pm - pl) + pl & \text{if } x > o \ \end{cases}$$

$$\begin{aligned} &\text{where:} \ & x: \text{current utilization}\ & o: \text{optimal utilization}\ & pl: \text{borrower rate at optimal utilization}\ & pm: \text{maximum borrower rate} \end{aligned}$$