Links

Protocol math (Solana)

Solana's programs use linear functions to derive interest rates. Thus, all of the interest rates on the Solana lending programs can be expressed as:
y = ax + b
Where y is the interest rate for a given utilisation rate x.
Variable a is the slope of the curve, determining how fast or slow interest accrues given a change in utilisation.
// Example of interest calculation when current utilisation is below 1st optimal rate
​
interestRate = ((BORROW_RATE_ONE - BASE_BORROW_RATE) / ( OPTIMAL_RATIO_ONE - 0 )) * utilizationRate + (-1*((BORROW_RATE_ONE - BASE_BORROW_RATE) / ( OPTIMAL_RATIO_ONE - 0 )) * 0 + BASE_BORROW_RATE )
​
/* y = interestRate
* a = (x2 - x1) / (y2-y1)
* x = utilizationRate
* b = -ax + y
*
* Meaning that:
*
* y = interestRate
* a = ((BORROW_RATE_ONE - BASE_BORROW_RATE) / ( OPTIMAL_RATIO_ONE - 0 ))
* x = utilizationRate
* b = (-1*((BORROW_RATE_ONE - BASE_BORROW_RATE) / ( OPTIMAL_RATIO_ONE - 0 )) * 0 + BASE_BORROW_RATE )
*/
Varying risk parameters and collaterals will result in different values for ax + b
// InterestRate.ts
// Parameters used in the default risk model
​
export const OPTIMAL_RATIO_ONE = 0.4;
export const OPTIMAL_RATIO_TWO = 0.8;
export const BASE_BORROW_RATE = 0.1;
export const BORROW_RATE_ONE = 0.25;
export const BORROW_RATE_TWO = 0.4;
export const BORROW_RATE_THREE = 1.4;