Simplified Interest Model

For Flip 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 Flip 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 additional deposits.

Base Interest Rate 2%

Utilization Rate (%)	Flat Borrow Rate (%)	Flat Deposit Rate (%)
1	2.1	1.68
5	2.5	2
10	3	2.4
15	3.5	2.8
20	4	3.2
25	4.5	3.6
30	5	4
35	5.5	4.4
40	6	4.8
45	6.5	5.2
50	7	5.6
55	7.5	6
60	8	6.4
65	8.5	6.8
70	9	7.2
75	9.5	7.6
80	10	8
85	10,5	8.4
90	11	8.8
95	11,5	9.2
100	12	9.6