Interest Rate Model
Bodh Finance Interest Rate Model
BODH currently uses the Jump Rate Model, which is more efficient at incentivizing liquidity at a higher utilization rate.
The interest for Stablecoin & Other (Bluechip) tokens are different in Bodh:
| Token | Interest Rate Type | Blocks per year | Base Rate Per Year | Multiplier Per Year | Kink | Jump Multiplier Per Year |
|---|---|---|---|---|---|---|
ETH | Bluechip | 1051200 | 0 | 25% | 50% | 100% |
WBTC | Bluechip | 1051200 | 0 | 25% | 50% | 100% |
USDC | Stablecoin | 1051200 | 0 | 20% | 50% | 100% |
USDT | Stablecoin | 1051200 | 0 | 20% | 50% | 100% |
BOBA | Bluechip | 1051200 | 0 | 25% | 50% | 100% |
DAI | Stablecoin | 1051200 | 0 | 20% | 50% | 100% |
FRAX | Stablecoin | 1051200 | 0 | 20% | 50% | 100% |
All interest rates in BODH are determined as a function of a metric known as the utilization rate. The interest rates on BODH are determined by the utilization rate, which is essentially the percentage of total assets borrowed out against the total asset supplied. A high utilization rate indicates that a lot of borrowing has occurred, while a low ratio indicates the opposite.
Utilization = Total Borrow / Total Supply
BODH's interest rate models dynamically adjust the interest rates of each asset market depending on the utilization rate. A high ratio would incur higher interest payments from borrowers, and consequently higher interest payments to suppliers, thereby encouraging suppliers to add more assets to the protocol and ensuring healthy levels of available liquidity.
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