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Interest Rates

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​

AssetBase RateBase SlopeOptimal UtilizationExcess SlopeMax Utilization
USDC10%15%80%500%80%
SUI10%20%80%500%80%
DEEP15%20%80%500%80%
WAL15%20%80%500%80%

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:

borrowRate = 10% + 50% × 15% = 10% + 7.5% = 17.5% APR

At 80% utilization (at optimal, which is also the max):

borrowRate = 10% + 80% × 15% = 10% + 12% = 22% APR
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Margin Pool

Learn about margin pools and how they enable liquidity for leveraged trading.

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DeepBook Margin package

The DeepBook Margin package on GitHub.