Unleash Protocol
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  • Unleash IPad
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      • IPGE
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  • UnleashMarket
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    • Borrowing
    • Interest Rates
    • Liquidation
    • Flash Loan
    • Efficency Mode
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    • Siloed Borrowing
  • Unleasher Guide
    • Supply and Withdraw on Unleash
    • Borrow and Repay on Unleash
    • Health Factor and Liquidation on Unleash
  • Benjamin
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  • Unleash's Interest Rate Mechanics
  • Upgradable and Responsive Protocol
  1. UnleashMarket

Interest Rates

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Last updated 10 months ago

Unleash Market is set to implement a sophisticated Trilinear Interest Rate Model. This innovative model ensures that interest rates within our lending and borrowing platform are responsive to the ever-changing dynamics of the IPFi market, yet remain as stable as possible to benefit all participants.

Unleash's Interest Rate Mechanics

The Trilinear Interest Rate Model is an intricate design crafted to provide a balanced response to varying liquidity conditions. It operates on three distinct phases, each tailored to different levels of capital utilization within our Asset Pools. This tiered structure is meticulously engineered to:

  • Maintain liquidity: By offering gentler interest rate curves under normal market conditions, we ensure less volatility in rates, providing a stable and predictable yield environment for liquidity suppliers.

  • Capture full market rates: When market conditions become extreme, the model’s steeper segments activate, reflecting the true cost of capital in high-demand scenarios, thus effectively balancing the supply-demand relationship.

  • Reward liquidity providers: As capital utilization approaches its ceiling, the interest rate model adjusts to offer higher yields, compensating our providers for the increased risk they shoulder in times of high demand.

if U≤Uoptimal:   R=R0+(Roptiaml−R0)Uoptimal⋅Uif Uoptimal≤U≤Utight:   R=Roptimal+(Rtight−Roptimal)(Utight−Uoptimal)⋅(U−Uoptimal)if Utight≤U:   R=Rtight+(Rmax−Rtight)(1−Utight)⋅(U−Utight)if \ U \leq U_{optimal} : \ \ \ R= R_{0} + {(R_{optiaml} -R_{0})\over U_{optimal}} \cdot U \\ if \ U_{optimal} \leq U \leq U_{tight} : \ \ \ R = R_{optimal} + {(R_{tight} -R_{optimal})\over (U_{tight}-U_{optimal})} \cdot (U-U_{optimal}) \\ if \ U_{tight} \leq U : \ \ \ R = R_{tight} + {(R_{max} -R_{tight})\over (1-U_{tight})} \cdot (U-U_{tight})if U≤Uoptimal​:   R=R0​+Uoptimal​(Roptiaml​−R0​)​⋅Uif Uoptimal​≤U≤Utight​:   R=Roptimal​+(Utight​−Uoptimal​)(Rtight​−Roptimal​)​⋅(U−Uoptimal​)if Utight​≤U:   R=Rtight​+(1−Utight​)(Rmax​−Rtight​)​⋅(U−Utight​)

  • When U≤UoptimalU \leq U_{optimal} U≤Uoptimal​​ the borrow interest rates increase slowly with utilisation in R0≤R≤RoptimalR_{0} \leq R \leq R_{optimal}R0​≤R≤Roptimal​

  • When Uoptimal≤U≤UtightU_{optimal} \leq U \leq U_{tight} Uoptimal​≤U≤Utight​the borrow interest rates increase sharply with utilisation in Roptimal≤R≤RtightR_{optimal} \leq R \leq R_{tight}Roptimal​≤R≤Rtight​

  • When Utight≤UU_{tight} \leq U Utight​≤Uthe borrow interest rates increase dramatically with utilisation in Rtight≤R≤RmaxR_{tight} \leq R \leq R_{max}Rtight​≤R≤Rmax​, This ensures that liquidity providers are properly compensated for the increased risk, and signals to borrowers to reduce their positions due to increased borrowing costs.

Upgradable and Responsive Protocol

Unleash Protocol's smart contracts, including those governing interest rates, are designed to be upgradeable. This flexibility allows us to refine our interest rate models, liquidation parameters, and oracle integrations to adapt to the evolving market landscape and community-driven governance decisions.

As Unleash Protocol continues to grow and the governance model matures, we will progressively decentralize authority, ultimately transitioning control over these critical parameters to our community of token holders. This will ensure that Unleash Protocol remains at the forefront of IPFi innovation, responsive to the needs of its users, and aligned with the overarching goal of fostering a robust and equitable financial ecosystem on the blockchain.