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 UU.

UU 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

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