Interest Rates
Interest rates in GlowSwap are utilization based. The utilization rate is the ratio of the total borrowed amount to the total liquidity in the pool.
Utilization Rate = Total Borrowed / (Liquidity In Main + Total Borrowed)Interest Rate Calculation
Interest rate calculations follow a step function based on the utilization rate as well as the current interest rate. In normal conditions, the interest rate can increase or decrease by as much as 20% of the current interest rate per day. GlowSwap targets an 80% utilization rate. When the utilization rate is above 80%, the interest rate will increase, and inversely when the utilization rate is below 80%, the interest rate will decrease.
The interest rate is calculated as follows:
Current Rate: 0.30%
Utilization: 75%
Days: 1
Final Interest Rate: 0.225%
When Current Rate > 0.5%:
1. If Utilization ≥ 80%:
rate = currentRate * 1.2^days2. If Utilization 60-80%:
rate = currentRate / (1.2 - 0.2 * (utilization - 0.6) / 0.2)^daysrate *= (1 + 0.8 * 20/19 * (utilization/0.8 - 1))^days3. If Utilization < 60%:
rate = currentRate / 1.2^daysWhen Current Rate ≤ 0.5%:
1. If Utilization ≥ 80%:
rate = currentRate + (20/19) * 0.4 * (utilization/0.8 - 1) * days2. If Utilization 60-80%:
rate = currentRate - 0.1 * (utilization - 0.6)/0.2 * days3. If Utilization < 60%:
rate = currentRate - 0.1 * daysKey Points
- Target utilization rate is 80%
- After 80% utilization interest rates climb, and below 80% interest rates decrease
- Different adjustment formulas apply depending on whether current rate is above or below 0.5%
- Rates have minimum (0.1%) and maximum (10,000%) bounds