Borrow & Lending [SOL/USDC]
SOL/USDC Borrowing & Lending at variable rate yields
Coin Capital® NFT funds work across all the major .
Additionally funds are automatically allocated on a daily basis into the most efficient protocol for maximizing Yield.
We use the following platform for Borrowing and Lending:
The allocation is based in APR & Utilization Rate, which represents the availability of capital within the system.
If Utilization is high -- there is abundant capital within the system and the protocol users are given incentives in the form of low-interest rates to encourage borrowing;
If Utilization is low -- capital within the system is scarce and the protocol will increase interest rates to incentivize more capital supply and repayment of debt.
Interest Rate Model
Note: this model has been adapted from Aave's interest rate model. The parameters and model will be iterated and improved as Coin Capital's borrow/lend funds grows.
Liquidity risk materializes when utilization is high and this becomes more problematic as U gets closer to 100%.
To tailor the model to this constraint, the interest rate curve is split into two parts around an optimal utilization rate Uo. Before Uo the slope is small, after it begins rising sharply.
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