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Borrowers pay interest on outstanding debt. Suppliers earn a share of that interest through their supplied balances. Rates vary by market and change as utilization and market settings change.

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Supplied balances and debt

Base lending interest is included in the supplied balance without a separate claim transaction. Borrow interest adds to outstanding debt until it is repaid. Both balances reflect the time elapsed since interest was last accounted for. Annual percentage yield (APY) expresses an annual rate including a compounding assumption. Annual percentage rate (APR) excludes that compounding effect. A displayed APY does not predict the rate over the life of a position or guarantee a return.

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Utilization and rates

Utilization is the fraction of the market’s total supplied balance that is borrowed. Borrowing increases utilization; repayments and additional supply reduce it. The interest-rate curve has two breakpoints and three segments. Above the second breakpoint, called optimal utilization, the rate follows the third segment. Each market configures its own curve and maximum borrow rate. Supplier returns depend on utilization, the borrow rate, and the reserve factor. Higher demand can increase supplier returns, but the supply rate is also affected by how borrower interest is divided.

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Utilization ceiling

Each market sets a maximum utilization. Ordinary borrowing and withdrawals cannot push utilization above that ceiling, even if enough cash remains for the requested transfer. This limit can prevent an immediate withdrawal. Holding a supplied balance does not guarantee that all of it is available as cash at the time of withdrawal. See Withdraw.

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Protocol revenue

The reserve factor sets the share of borrower interest allocated to the protocol. The remaining interest is allocated to suppliers. Each market sets its own reserve factor. Protocol revenue accrues as supply shares and is claimed separately. Unclaimed revenue shares and supplier shares both bear bad-debt write-offs in their market. Use live configuration for active rates and settings. The interest reference covers index calculations and configured rate curves.