@gpe75fish · Oct 29, 2023, 08:34
As the amount of money borrowed (Borrow) gets closer to the total supplied amount (Supply), the Annual Percentage Yield (APY) increases algorithmically.
For instance, as of October 28,
・borrow $273K (273/305=89%).
This situation means that 89% of the deposited $305K, which equates to $273K, has been lent out, leaving only $32K available in the pool.
Consequently, the protocol elevates the borrow APY to incentivize borrowers to repay their loans sooner.
If the system functions correctly, this mechanism will lead to a reduced utilization rate, and the borrow APY will decrease accordingly.
Tied to these dynamics, the deposit APY will also fluctuate, increasing or decreasing in response to the changing conditions.