How much does your assets earn?
- Savings account interest rates
- The calculation for these rates
Savings Account Interest Rate:
DeFiner uses market rates to determine the interest rate for each of our savings account assets (ETH, DAI, etc.) In short, lending rates determine the savings rates paid to our depositors.
Rates are always changing just like asset prices are. That said, our commitment (and ability) is to always offer industry-leading rates. This is made possible as a matter of principle, and because we are a truly decentralized platform with less overhead than centralized crypto finance companies.
Interest Calculation:
Here is the formula for how we calculate our interest rates. The figures used are hypothetical.
|
Compound Supply Rate |
Current compound Lend APR |
12% |
|
Compound Borrow Rate |
Current compound Borrow APR |
18% |
|
Capital Reserve Ratio (R) |
% of Remaining capital in the savings pool to total capital |
=1-U-C=10% |
|
Capital Compound Ratio (C) |
% of capital in Compound to total capital |
23% |
|
DeFiner Community Fund Ratio (D) |
Fees charged for interests generated |
10% |
|
Utilization Rate (U) |
Loans Outstanding/Total Market Deposit |
67% |
|
Loans Outstanding |
The total value of loans borrowers have |
200,000 |
|
Total Market Deposit |
The total value of deposit lenders have |
300,000 |
|
Borrow APR |
Annualized Interest Rate for borrowing |
15% |
|
Deposit APR |
Annualized Interest Rate for lending |
12.81% |
|
Borrow APR w/o Compound rate |
Borrow APR calculation when the Compound rate is not available |
13% |
|
DeFiner Community Fund Ratio (D) |
Fees charged for interests generated and insurance |
10% |
Utilization Rate & Interest Calculation
When Compound.finance money market is available:
- Capital Reserve Ratio (R) is always between 10% - 20% (10%<=R<=20%),
- Capital Reserve Ratio (R), Compound Reserve Ratio (C), and Utilization Rate (U) is always equals to one, (C+R+U=1);
In this case, let's assume C=23%;
Then the calculation is:
- Borrow APR = (Compound Supply Rate + Compound Borrow Rate)/2 = (12%+18%)/2 =15%
- Deposit APR = (Borrow APR * Utilization Rate (U) + Compound Supply Rate * Capital Compound Ratio (C) = 15%*67% + 12% * 23% = 12.81%
When Compound.finance money market is not available:
- Borrowing Interest Rate = 3% + U * 15% = 3% + 67% * 15% =13%
- The utilization ratio U for each market a unifies supply and demand into a single variable: U = Borrowsa / (Casha + Borrowsa). The demand curve is codified through governance and is expressed as a function of utilization.
- For example, borrowing interest rates may resemble the following: Borrowing Interest Rate = 3% + U * 15%. The interest rate earned by suppliers is implicit, and it is equal to the borrowing interest rate multiplied by the utilization rate.
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