Interest Rate

BoostSwap uses the interest rate set based on the supply and demand algorithm to establish the trust market. Based on the changes in the supply and demand of asset borrowing and deposits, the trust pool of interest rates is calculated by the algorithm. Debiters and lenders of assets directly deliver on-chain through smart contracts, thereby earning or paying floating interest rates.

Ua = Borrowsa / (Casha + Borrowsa)

Interest Rate Model

BoostSwap does not need to negotiate with borrowers, lenders, liquidators and other parties, but uses an interest rate model to achieve interest rate equilibrium based on the relationship between supply and demand. According to economic theory, interest rates ,the "price" of money, should increase with demand; when demand is low, interest rates should be low, and vice versa. The utilization rate U of each market a unifies supply and demand into one variable:

Ua = Borrowsa / (Casha + Borrowsa)

The demand curve is coded by governance and expressed as a function of utilization. For example, the borrowing rate might be similar to the following: Borrowing Interest Ratea = 2.5% + Ua * 20%

The interest rate earned by the supplier is implicit, equal to the borrowing rate multiplied by the utilization rate. It relies on the interest rate model to motivate. During periods of extreme demand for assets, the tokens available for withdrawal or lending will fall; when this happens, interest rates will rise, thereby stimulating supply and inhibiting lending.