> For the complete documentation index, see [llms.txt](https://docs.airpuff.io/llms.txt). Markdown versions of documentation pages are available by appending `.md` to page URLs; this page is available as [Markdown](https://docs.airpuff.io/product-airdrop/lending/interest-rates.md). # Interest Rates Lenders engaging with AirPuff's lending platform will enjoy hourly lending interest within a non-rebase model, adhering to the ERC-4626 standard. This ensures that the lending token price progressively increases over time. Upholding a protective nature, lending capital remains safeguarded even during the liquidation events of leveraged positions. This guarantees that lenders can consistently receive their capital along with accrued interests. ## **Interest Rate Model:** For borrowers, the interest rate is determined by the utilization of the corresponding lending pool. The higher the utilization rate, the greater the interest rate, encouraging more lending capital or prompting borrowers to close their positions. AirPuff will be collecting zero interest spreads from lenders, ensuring that 100% of the interest paid by borrowers is directly passed on to lenders, rewarding them for their contribution to the ecosystem. * **0-80% Utilization Rate:** Interest rates will grow linearly from 5% to 15%. * **80-100% Utilization Rate:** Interest rates will experience a linear increase from 15% to 45%. The aforementioned model provides a guaranteed income for lenders across different utilization rates. This two-tiered approach ensures that interest rates are responsive to the dynamics of the lending pool utilization. As the utilization rate approaches its upper limit, the interest rates incrementally rise. This approach strikes a balance between incentivizing lending capital and maintaining a fair and sustainable lending ecosystem. The base rate will be reviewed and discussed on a monthly basis. While the above formula establishes the base interest rate for each lending pool, we also consider the potential APR that borrowers may receive from the Buffs. This helps us better reflect the real demand for borrowing. For example, if the implied APR is significantly higher than the borrowing rate, the utilization rate will constantly remain at a high level. This is not a healthy situation for lenders. When the utilization rate exceeded 80% in a consecutive 3 days, an Additional Rate Index will be applied into the interest rate curve. The Additional Rate Index will be reviewed and discussed on a weekly basis. Interest Rate = 5 + (Max (80, (UR / 80))) \* 10 + ((MIN(80, (UR - 80))) / 20) \* 30 + ((AdditionalRateIndex ^ (UR / 80)) if (UR > 80% for 3 consecutive days) This approach ensures that our lending ecosystem remains dynamic and adapts to market conditions while safeguarding the interests of lenders. We prioritize maintaining a fair and sustainable environment while providing borrowing opportunities at competitive rates. --- # Agent Instructions This documentation is published with GitBook. GitBook is the documentation platform designed so that both humans and AI agents can read, navigate, and reason over technical content effectively. Learn more at gitbook.com. ## Querying This Documentation If you need additional information that is not directly available in this page, you can query the documentation dynamically by asking a question. Perform an HTTP GET request on the current page URL with the `ask` query parameter, and the optional `goal` query parameter: ``` GET https://docs.airpuff.io/product-airdrop/lending/interest-rates.md?ask=&goal= ``` `ask` is the immediate question: it should be specific, self-contained, and written in natural language. `goal` is optional and describes the broader end goal you are ultimately trying to accomplish on behalf of the user. GitBook uses it to tailor the answer towards what is most useful for that goal. The response will contain a direct answer to the question and relevant excerpts and sources from the documentation. Use this mechanism when the answer is not explicitly present in the current page, you need clarification or additional context, or you want to retrieve related documentation sections.