The standard model is used for markets that have relatively lower historical utilization (typically below 80%). Under the standard model, here are how the rates are calculated:
Base Rate + (Multiplier x Utilization Rate)
Base Rate
+
(Multiplier x Utilization Rate) Borrow Rate x Utilization Rate x (1 - Reserve Factor) The Key Parameters are defined as below;
The minimum (floor) borrowing rate
Scale factor per utilization
Total Assets borrowed / Total assets Deposited
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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