# Borrow Interest Rate

The utilization rate of each market reflects the true situation of the available assets in that market, the utilization rate *U* is defined as follows:

As *U* approaches 100%, loanable assets become more and more scarce, and when* U = 100%*, because there is no more liquidity, users can no longer borrow assets. At the same time, if suppliers want to withdraw their liquidity, they will fail because there is no liquidity available.

JustLend DAO's interest rate strategy can maximize the utilization of assets while effectively managing liquidity risks. The borrowing rate is closely related to the utilization rate of funds in the market. The interest rate model is calibrated around an optimal utilization rate $U_{optimal}$ per market that reflects the real conditions and the JustLend DAO also supports market liquidity by providing incentives for deposit users and managing liquidity risk through the interest rate model.

When sufficient funds are available in the market: Lower interest rates to encourage borrowing.

When available funds in the market are scarce: Increase interest rates to encourage loan repayments and additional deposits.

## Interest Rate Model

When utilization in the market is high, liquidity risk will appear, and as it approaches 100%, liquidity risk will peak. In order to better solve this problem, the interest rate curve of JustLend DAO is divided into two parts with optimal utilization as the dividing line. The slope of the curve is small until optimum utilization is reached, and increases sharply beyond optimum utilization.

The *U* value can be used to monitor the share of the market's total assets that have been borrowed at time *t*. The interest rate $R_{t}$ is defined as below:

The interest rate models for all markets are derived from the formula above, with different parameters used for different markets.

When

When $U\geq\ U_{optimal}$, the borrow interest rates increase sharply with utilization to above 50% APY if the liquidity is fully utilized.

Since the borrowing rate keeps changing with the change of the utilization rate, this characteristic brings certain difficulties to financial planning. Especially for those users who need to stabilize the borrowing interest rate, when calculating the borrowing rate, a certain buffer needs to be added, and at the same time, it is necessary to pay close attention to the capital utilization rate of the market.

**Model Parameters**

**Model Parameters**

In general, tokens with similar risk profiles will have similar interest rate models and parameters. The parameters of the interest rate model can be adjusted with changes in market conditions, and changes in these parameters need to be adapted to the current utilization rate of the JustLend DAO market and the corresponding incentive measures.

For example, USDD has staking incentives on multiple platforms, the interest rate curve of USDD is much higher than other stable coin markets. With the utilization increase of the USDD market, the supply users will get super high returns.

With the rise of liquidity mining and various Defis, supplier and borrowers can earn income by participating in different Defis, in order to balance the borrowing costs in various markets. The JustLend DAO can increase the cost of borrowing users by adjusting the optimal usage of a specific market, thereby offsetting the benefits they earn in borrowing mining.

### Main parameters of the JustLend DAO markets (as of Jul 17, 2023)

Market | Uₒₚₜᵢₘₐₗ | Base | Slope 1 | Slope 2 |
---|---|---|---|---|

ETH | - | 2.00% | - | 32.00% |

sTRX | 80.00% | 2.00% | 25.00% | 200.00% |

TRX | 80.00% | 2.00% | 25.00% | 200.00% |

USDT | 80.00% | 0.00% | 5.00% | 26.80% |

USDJ | 80.00% | 0.00% | 5.00% | 26.80% |

WIN | 80.00% | 2.00% | 32.00% | 112.00% |

BTC | - | 2.00% | - | 32.00% |

JST | 80.00% | 2.00% | 32.00% | 112.00% |

WBTT | 80.00% | 2.00% | 32.00% | 112.00% |

ETHOLD | - | 2.00% | - | 32.00% |

TUSD | 80.00% | 0.00% | 5.00% | 26.80% |

NFT | 80.00% | 2.00% | 32.00% | 112.00% |

SUN | 45.00% | 5.00% | 55.00% | 275.00% |

USDC | 80.00% | 0.00% | 5.00% | 26.80% |

BUSD | 80.00% | 0.00% | 5.00% | 26.80% |

BTT | 80.00% | 2.00% | 32.00% | 112.00% |

USDD | 50.00% | 1.00% | 25.00% | 200.00% |

**Interest Rate Parameters Change History**

**Interest Rate Parameters Change History**

When market conditions change, so does risk. JustLend DAO will continuously monitor the** **utilization rate of each market, and adjust the interest rate parameters in time to ensure that the liquidity of each market is available for a long time. Mitigate risks from market conditions.

Below is a record of JustLend DAO’s adjusted interest rate Parameters.

Date | Market | Uₒₚₜᵢₘₐₗ | Base | Slope1 | Slope2 |
---|---|---|---|---|---|

14 Jul 2023 | ETH | - | 2.00% | - | 32.00% |

26 Jun 2023 | sTRX | 80.00% | 2.00% | 25.00% | 200.00% |

22 Jan 2023 | USDC | 80.00% | 0.00% | 5.00% | 26.80% |

22 Jan 2023 | BUSD | 80.00% | 0.00% | 5.00% | 26.80% |

26 Dec 2022 | TRX | 80.00% | 2.00% | 25.00% | 200.00% |

30 Aug 2022 | USDC | 90.00% | 0.00% | 5.00% | 20.00% |

2 Aug 2022 | TRX | 80.00% | 2.00% | 30.00% | 300.00% |

2 Aug 2022 | USDD | 50.00% | 1.00% | 25.00% | 200.00% |

28 Jun 2022 | TRX | 40.00% | 2.00% | 20.00% | 300.00% |

28 Jun 2022 | USDD | 5.00% | 1.00% | 20.00% | 200.00% |

27 Jun 2022 | TRX | 80.00% | 2.00% | 25.00% | 150.00% |

27 Jun 2022 | USDD | 30.00% | 0.00% | 5.00% | 120.00% |

## Interest Rate Curves

This section shows JustLend DAO interest rate curves per market.

#### USDD

#### USDC/BUSD

#### USDT/TUSD/USDJ

#### TRX/sTRX

#### BTT/WBTT/JST/WIN/NFT

#### BTC/ETH

#### SUN

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