APR
Last updated
Last updated
Within OrdiLend, the APR (Annual Percentage Rate) is a dynamic measure, reflecting real-time adjustments based on the platform's lending activity. It encompasses several components, each contributing to the overall financial experience for users:
Supply(Base) APR: This is the foundational interest accrued on supplied assets, which escalates as the value of these assets increases.
Borrow(Base) APR: The fundamental interest rate charged on borrowed assets, which accumulates in accordance with the size of the borrowed asset. This rate might be negative, signifying that borrowers are paying interest.
Supply Reward APR: OrdiLend incentivizes users with $ODLD tokens for supplying assets to the platform, enhancing the attractiveness of asset provision.
Borrow Reward APR: This aspect represents the $ODLD token rewards allocated by OrdiLend for asset borrowing, consistently maintaining a positive value to encourage borrowing activities.
The Reward APR has the potential to triple, contingent upon an individual's xODLD (the staked version of $ODLD) market share relative to the entire user base.
The Net APR is deduced as follows: Net APR = Supply APR (comprising Supply(Base) APR + Supply Reward APR) subtracted by Borrow APR (encompassing Borrow(Base) APR + Borrow Reward APR). The Net APR could manifest as negative if the Borrow(Base) APR does not fully offset the yield.
Consider a scenario where:
The Supply APR stands at 5%
The Supply Reward APR is also at 5%
The Borrow APR is set at -10%
The Borrow Reward APR is at 15%
In this case, a user depositing 100 USDC and borrowing 50 USDC would accrue a basic supply yield of 5 USDC, in addition to $5 (Supply reward) + $7.5 (Borrow reward) in $ODLD rewards annually. However, they would need to cover 5 USDC in annual borrowing interest. When all calculations are made in dollar terms, the user would realize an annual yield of $7.5, rendering a Net APR of 7.5%.
OrdiLend, adhering to LayerBank's established code and mechanisms but transitioning to the $ODLD token, maintains the integrity of these financial formulas, ensuring a consistent and reliable APR framework for its users.
