Interest Rate Model
Description
Sake Finance employs a variable interest rate model to manage liquidity risk and optimize utilization.
The borrow interest rate follows a piecewise linear function based on the utilisation rate. The interest rate increases slowly until the optimal utilization rate and then more rapidly at high utilization, effectively balancing supply and demand in the protocol.
Borrow Rate Formula
Where:
Different models use varied parameters to encourage lending and prevent over-borrowing, tailoring to specific market needs and risk profiles.
Supply Rate
The supply rate is the interest earned by users who provide liquidity to Sake Finance. It's calculated based on the interest paid by borrowers, minus a portion set aside for the protocol's reserve.
Where:
The reserve factor is the percent of protocol interest that goes to the Sake Ecosystem Reserve. Each Sake market has a collector contract which stores the revenue from the reserve factor.
Main Interest Rate Model Parameters
Supported Assets
Variable Interest Rate Model
WBTC
WETH
Stable One Interest Rate Model
DAI
Stable Two Interest Rate Model
USDT
USDC
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