# Simplified Interest Model

For Flip loans

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%

Last updated

For Flip loans

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%

Last updated

FRAKTâs 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:

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