# Interest Rates

*[Documentation index](/llms.txt) · [Full index](/llms-full.txt)*

Margin pools use a kinked interest rate model where the borrow rate increases gradually up to an optimal utilization point, then rises sharply to discourage excessive borrowing and maintain liquidity for withdrawals.

## Borrow interest formula

The formula for the borrow interest rate (APR) is:

```
if utilization < optimalUtilization:
    borrowRate = baseRate + utilization × baseSlope
else:
    borrowRate = baseRate + optimalUtilization × baseSlope + (utilization - optimalUtilization) × excessSlope
```

Where:
- **Utilization**: The ratio of total borrowed assets to total supplied assets
- **Base Rate**: The minimum interest rate when utilization is 0%
- **Base Slope**: The rate of increase in interest below optimal utilization
- **Optimal Utilization**: The target utilization rate (typically 80%)
- **Excess Slope**: The steep rate of increase above optimal utilization

## Current parameters

| Asset | Base Rate | Base Slope | Optimal Utilization | Excess Slope | Max Utilization |
| ----- | --------- | ---------- | ------------------- | ------------ | --------------- |
| USDC    | 0%        | 15%        | 80%                 | 500%         | 90%             |
| SUIUSDE | 0%        | 15%        | 80%                 | 500%         | 90%             |
| SUI     | 3%        | 20%        | 80%                 | 500%         | 90%             |
| DEEP    | 5%        | 25%        | 80%                 | 500%         | 90%             |
| WAL     | 5%        | 25%        | 80%                 | 500%         | 90%             |

The **Max Utilization** rate caps how much of the pool's liquidity can be borrowed, ensuring suppliers can always withdraw a portion of their funds.

## Examples

**At 50% utilization in the USDC pool (below optimal):**
```
borrowRate = 0% + 50% × 15% = 0% + 7.5% = 7.5% APR
```

**At 80% utilization (at optimal):**
```
borrowRate = 0% + 80% × 15% = 0% + 12% = 12% APR
```

**At 85% utilization (above optimal, below max):**
```
borrowRate = 0% + 80% × 15% + (85% - 80%) × 500% = 0% + 12% + 25% = 37% APR
```