Borrower Interest Rate

For borrowers on OrdiLend, the Borrow APR is initially determined upon setting up the loan and collateral, adhering to a double-slope curve that is responsive to the pool's Utilization Rate. The formula for calculating the borrower's interest rate (R) integrates the APR and Utilization Rate (U), remaining susceptible to changes influenced by market dynamics and strategic decisions by the OrdiLend DAO.

Asset	Optimal	Slope 1	Slope 2
ETH/BTC	90%	4%	75%
USDC	80%	4%	90%
WORDI	70%	5%	80%
WSATS	65%	8%	100%
More Assets...

These figures can change at any time based on market conditions and the strategic choices of the DAO

The calculation is as follows:

Ex) $where~U_t~max =1$

Slope Under Utilized :

$$if~U_t < U_{otimal} : R_t = R_0 + \frac{U_t}{U_{otimal}} \times R_{slope1}$$

Slope Over Utilized :

$$if~U_t ≥ U_{otimal} : R_t = R_0 + R_{slope1}+\frac{U_t-U_{optimal}}{1-U_{otimal}} \times R_{slope2}$$

This model ensures that the borrower's interest rate is adjusted based on the Utilization Rate's deviation from an optimal threshold. Exceeding this threshold escalates the loan interest rate, augmenting interest accrual for depositors, thereby enhancing deposit appeal to mitigate liquidity deficits. Conversely, a dip below the optimal Utilization Rate diminishes the loan interest rate, fostering loan demand to stabilize the Utilization Rate.

Supplier Interest Rate Mechanism

On the other side, the Supplier Interest Rate in OrdiLend denotes the earnings for liquidity providers. It's computed through a formula that incorporates "R", the prevailing interest rate, and "U", the Utilization Rate, mirroring the current lending dynamics and demand within OrdiLend.

$$\rm Supply~Interest~Rate = (\it R_t\times U_t) \times Reserve~Factor$$

*Note: The Reserve Factor is a critical component that delineates the fraction of the interest generated from borrower payments that is allocated to the OrdiLend protocol itself.