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High risk model

Interest rate model for low risk assets

Objective

The high risk model is tailored for high risk collaterals. It aims to maintain optimal utilisation between 40% and 60%, while attempting to minimise the risk of 100% utilisation.
  • Novel assets
  • Volatile assets
  • Protect lenders

Graph

The spread between the borrow rate and the supply rate is due to capital inefficiency.
The less supplied funds are being utilised, the less supplied funds earn interest. As more of the supplied funds earn interest, the spread between interest paid by borrowers and earned by lenders tightens.t
These values do not factor in admin fees. Higher the admin fees result in lower supply APRs.

Table

Utilisation rate
Borrow APR
Supply APR
0%
10%
0%
5%
17.5%
0.88%
10%
25%
2.50%
15%
32.5%
4.88%
20%
40%
8.00%
25%
47.5%
11.80%
30%
55%
16.50%
35%
65%
21.88%
40%
70%
28%
45%
72.5%
32.63%
50%
75%
37.50%
55%
77.5%
42.63%
60%
80%
48.00%
65%
107.5%
69.88%
70%
135%
94.50%
75%
162.5%
121.88%
80%
190%
152%
85%
217%
184%
90%
245%
220.5%
95%
272.5%
258%
100%
300%
300%