# Interest Rates and Calculation

## 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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