# Dynamic Lending Rates
At Tea-REX, we have a dynamic lending rate model that evolves like the natural environment, providing optimal capital efficiency and market stability.
## Model
The lending rate model is represented by two primary curves:
1. Borrow Rate Curve (Blue) - The borrow rate paid by Rex Wranglers (Traders)\
→ The rate paid by borrowers increases as more liquidity is borrowed from the pool.
2. Supply Rate Curve (Orange) - The APY earned by Jungle Patrons (Lenders)\
→ The Lending APR earned by suppliers rises as borrowing increases.
As shown in the graph, these **rates adjust dynamically based on the Utilization Rate of each Earn Pool**.
#### **Key Parameters:**
* **Base Rate (1%)**: The minimum borrowing APR when the pool’s utilization is low.
* **Growth Rate (24%)**: The rate at which borrowing costs increase as utilization rises.
* **Reserve Ratio (10%)**: The portion of the pool kept in reserve for stability.
***
#### **Example at 80% Utilization:**
* **Borrowers** pay around **20% APR**.
* **Suppliers** earn about **16% APR**.
As the **Utilization Rate** increases, both borrowing costs and **Lending APR** rise, rewarding Jungle Patrons for their liquidity.
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