Interest Rates

Rate Model

Pulend uses a utilization-based interest rate model. Rates adjust automatically based on how much of the pool is borrowed.

\text{Utilization} = \frac{\text{Total Borrowed}}{\text{Total Supplied}}

Utilization	Meaning
0%	No borrowing activity
50%	Half of supplied assets borrowed
80%	Optimal target utilization
100%	All assets borrowed (no withdrawals)

The interest rate follows a kinked curve:

Range	Behavior
0% - Optimal	Gradual rate increase
Above Optimal	Steep rate increase

Parameter	Description
`baseRate`	Minimum interest rate
`optimalUtilization`	Target utilization (typically 80%)
`rateAtOptimal`	Rate at optimal utilization
`scaledPercentage`	Multiplier for rates above optimal

Supply APY = Borrow Rate × Utilization Suppliers earn a portion of what borrowers pay, proportional to pool utilization.

Higher utilization means higher returns for suppliers but also higher costs for borrowers.