Interest Rate Model
Bend’s interest rate model is calibrated to manage liquidity risk and optimize utilization. The borrow interest rates come from the Utilization Rate
is an indicator of the availability of capital in the pool. The interest rate model is used to manage liquidity risk through user incentivizes to support liquidity:
- When capital is available: lower interest rates to encourage loans.
- When capital is scarce: higher interest rates encourage repayments for the loans and additional deposits.