Interest Rate Model

AssetDesk is building the protocol on economic driven rules of supply and demand. Both Lenders and Borrowers create market and drive it based on the two main parameters: scarcity of the asset and interest rate for it. The more scarce asset is the higher interest Borrowers will pay for using this asset, the same time market incentivize owners of such asset to come on the market and lend it -> decreasing scarcity and as a result the interest rate.

AssetDesk supports both Variable and Stable Interest Rates giving Borrowers option to choose their strategy and payment.

Interest Rate is accrued on a block basis and applied to Borrower debt position of particular asset (currently AssetDesk supports only interest in the same asset as debt).

Interest accrued and in future paid by Borrowers is re-calculated to Lenders of particular asset and also applied on a block asset.

Variable Interest Rate (Rv) and Stable Interest Rate (Rs) of the asset are re-calculated after each state change of Total Collateral Balance (A) or Total Borrow Balance (Lt) of a particular asset (after each operation borrow, deposit, repay, redeem or liquidation). where:

• S - Scarcity Ratio,

• ST - Scarcity Rate Target (75%),

• Rm - Safe Borrow Rate Max (4-8%),

• R0 - Base Rate (parameter for each asset pool - 0-3%),

• g - Rate Growth Factor (50-200%).

Stable Rate (rs) The interest rate for a stable-rate loan. Rate is fixed from origination of loan and determined in response to conditions of the system. Stable Rate Premium (ps) - Protocol adjusted parameter (current 3%). Flat-rate premium charged for stable-rate loans.