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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