Interest Rate Models

This lesson is for enrolled learners

The concept DeFi lending pools have no human rate-setter — borrow and supply rates are set entirely algorithmically, as a function of utilisation: the fraction of supplied assets currently borrowed out (U = total borrowed / total supplied). This single number drives everything, because it's the pool's real-time signal of supply-and-demand pressure for that asset. Most protocols use a two-slope……

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