# Interest Rate Model

Moar Market uses a **utilization-based interest rate model** to dynamically determine borrowing costs and lending yields. This model ensures:

* 💡 **Low borrowing cost** when liquidity is abundant
* 📈 **Rising interest rates** as utilization increases
* 🔐 **Strong yield incentives** for lenders when liquidity is tight

***

### 🔹 Piecewise Linear Borrow Curve

Moar's model is defined by a curve made up of multiple linear segments separated by **kink points**. Each kink marks a change in slope — the rate at which borrowing cost increases with utilisation.

**Example (3-segment curve with 2 kinks):**

| Utilisation (%) | Borrow APR (%) | Notes                        |
| --------------- | -------------- | ---------------------------- |
| 0               | 3.5            | Base rate                    |
| 70              | 10.0           | 📌 Kink 1 – moderate slope   |
| **90**          | 20.0           | 📌 Kink 2 – steep slope      |
| 100             | 50.0           | Max rate at full utilisation |

> 📘 **These numbers are examples** and can be updated by governance.

The more the pool is utilised, the higher the borrow APR — encouraging borrowers to repay and attracting more lenders.

***

### 📊 Interest Rate Curve

This chart visualizes the borrow APR across the full 0–100% utilisation range, showing how lender returns increase with utilisation.

***

### 🧮 Supply Rate: How Lenders Earn

Lenders earn a share of interest paid by borrowers.\
The **actual supply APR** depends on:

* Current **utilisation**
* The **borrow APR** (from the curve)
* The protocol’s **fee\_on\_interest** setting

#### Formula

```
supplyAPR = borrowAPR × utilisation × (1 – fee_on_interest)
```

Where:

* `borrowAPR` comes from the current point on the curve
* `utilisation = borrowed / supplied`
* `fee_on_interest` is the protocol’s share of interest (e.g. 10%)

#### Example

If:

* utilisation = 85%
* borrowAPR = 27.33%
* fee\_on\_interest = 10%

Then:

```
supplyAPR = 27.33% × 0.85 × 0.90 ≈ 20.9%
```

***

### ✅ Key Takeaways

* **Borrow APR** is based on a kinked utilisation curve
* **Supply APR** depends on utilisation and protocol fee
* All rates **adjust automatically** every block
* Lenders earn more when pools are heavily borrowed

Moar’s design creates natural feedback loops between borrowing cost, pool usage, and lender rewards — keeping the system efficient and fair.