> For the complete documentation index, see [llms.txt](https://docs.trex.trade/llms.txt). Markdown versions of documentation pages are available by appending `.md` to page URLs; this page is available as [Markdown](https://docs.trex.trade/more-about-the-jungle/dynamic-lending-rates.md).

# 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**.

<figure><img src="/files/xZagDd7rFvSZ2bde1rbi" alt=""><figcaption></figcaption></figure>

#### **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.