Sumer.Money
  • Sumer.Money: The Most Capital Efficient Blockchain Liquidity Infrastructure
  • KEY PREMISE
    • The Future is Multichain
    • Sumer - the most capital efficient Liquidity Infrastructure
      • Sumer's Capital Efficient unified liquidity pool
      • Sumer Synthetic Assets as Money Multipliers
  • SUMER POINTS PROGRAM - A Call for the Tribe
    • Introduction
    • Points Based Program
    • NFT Based Program
    • Sumer Partner Program — Meter Points
    • FAQs
  • Sumer Lending and Borrowing Market
    • Introduction
    • Asset Group Classification
    • Collateral Rate by Asset Group
      • Understanding the applicable mint limit
    • Deposit Native Assets
    • Mint SuTokens
    • Borrow Native Assets
    • Repay SuToken Liability
    • Repay Borrowed Native Assets
    • ​Interest Rate Model
      • Standard Model
      • Jump (Kink) Model
    • Redeem SuTokens
    • Liquidation Mechanism
    • Risk Management
  • Tokenomics
    • Token Distribution
  • Definitions
  • Frequently Asked Questions
    • Sumer Protocol
    • Deposit Market
    • Minting Synthetic Assets (SuTokens)
    • Borrowing Market
    • Liquidation
  • TUTORIALS
    • How to Deposit assets
    • How to Collateralize Tokens
    • How to Mint SuTokens
    • How to Borrow assets
    • How to Stake Sumer LP tokens into Liquidity Program
    • How to stake Sumer Tokens into veSumer Program
  • SECURITY
    • Audits
  • PROTOCOL PARAMETERS
    • SUMER Money Market
  • DEVELOPERS
    • Smart Contracts
    • sdr Tokens
    • Price Feeds
      • RedStone Price Feeds on Zklink Nova
      • Pyth Price Feeds on Meter
      • Chainlink Price Feeds on Arbitrum
      • Chainlink Price Feeds on Base
  • GOVERNANCE
    • Introduction
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  • Borrow rate
  • Deposit rate

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  1. Sumer Lending and Borrowing Market
  2. ​Interest Rate Model

Jump (Kink) Model

The jump (Kink) Model is a formula that is used for markets that have typically higher historical utilization. The resulting interest rate in this model will be significantly higher than that under the Standard Model regime to encourage heavier deposits and discourage further borrowing.

Borrow rate

Base Rate 
+ 
[Multiplier * min(Kink, Utilization)] 
+  
[Jump Multiplier * max(0, Utilization - Kink)]

Deposit rate

Borrow Rate x Utilization Rate x (1 - Reserve Factor) 

The Key Parameters are defined as below;

Kink

The cut-off point in utilization rate where interest rate follows the Jump Model (e.g., 80%)

Base Rate

The minimum (floor) borrowing rate

Base Rate

The minimum (floor) borrowing rate

Multiplier

Scale factor per utilization

Utilization Rate

Total Assets borrowed / Total assets Deposited

Reserve Factor

Percentage of the spread between Deposit & borrow (the protocol's revenue to be kept in treasury)

From the formula, we can see that Utilization Rate is the only dynamic parameter, whereas Base Rate, Multiplier, and Reserve Factor are determined as “constant”.

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Last updated 1 year ago

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