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Interest Rates

How interest rates are calculated

We use an interest rate formula similar to alternative lending protocols. The formula has the following configurable variables:

**Base borrow rate**: minimum interest rate paid by lenders**Optimal utilization rate**: utilization rate where curve switches from slope1 to slope2**Slope1**: rate of increase in APY between utilization rate of 0 and optimal utilization rate**Slope2**: rate of increase in APY between optimal utilization rate and 100% utilization**Reserve factor**: share of interest payments reserved for protocol insurance**XTK fee factor**: share of interest payment reserved for XTK token holders

Current configuration:

Variable

Value

Base borrow rate

2%

Optimal utilization rate

80%

Slope1

12

Slope2

95

Reserve factor

10%

XTK fee factor

10%

Last modified 1mo ago

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