Announcing Fringe’s improved interest rate model

Snapshot of our current situation

Why utilization rate?

Proposed changes

Diagrammatic representation of interest rate changes and utilization rates

  • IR = interest rate
  • Cu = current utilization rate (total borrowed/total loaned across the platform)
  • Tu= target utilization rate
  • G = gain factor (see below)
  • Jg = jump gain (only applies if Cu > Tu)
  • Ir = annualized borrower IR to be used for calculating accruals
  • LastIR = value of Ir calculated last time this calculation was run
  • Dt = years since the last time this calculation was run
  • Dir = change in borrower IR per year
  • E = (CuTu) = how far away from the target utilization rate we are (error expressed in percentage points)
  • if Cu > Tu: Dir = E x G x Jg; else Dir = E x G
  • Ir = LastIR + (Dt x Dir)

Parting thoughts

About Fringe Finance

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Fringe Finance

Decentralized financial ecosystem unlocking the dormant capital from traditional financial markets and all-tier cryptocurrencies. #DeFi lending & borrowing.