Interest Model

For Perpetual loans

FRAKT’s interest rate model is calibrated to manage liquidity risk and optimize utilization. The borrow interest rates come from the Utilization Rate $U$.

$U$ is an indicator of the availability of capital in the pool. The interest rate model for Perpetual loans is used to manage liquidity risk through user incentivizes to support liquidity:

• When capital is available: low interest rates to encourage loans.

• When capital is scarce: high interest rates to encourage repayments for the loans and additional deposits.

Borrow Interest Rate Curve

Deposit Interest Rate Curve

Base Interest Rate 3%

Utilization Rate (%)	Yearly Borrow Rate (%)	Yearly Deposit Rate (%)
1	4.37	0.03
5	8.05	0.25
10	12.65	0.77
15	17.25	1.58
20	21.85	2.66
25	26.45	4.03
30	31.05	5.67
35	35.65	7.60
40	40.25	9.80
45	44.85	12.29
50	49.45	15.05
55	60.95	20.41
60	72.45	26.46
65	83.95	33.22
70	95.45	40.67
75	106.95	48.83
80	118.45	57.68
85	129.95	67.24
90	141.45	77.49
95	152.95	88.45
100	164.45	100.10