Interest rates

at the heart of our project lies an interest rate settlement mechanism that allows a functional market for borrowing tezos assets and reallocation of risks between lenders (who provide collateral) and farmers (who use said collateral to attain additional leverage while providing liquidity) the way this settlement works is as follows lenders submit their assets, while farmers submit their leverage demands the supply and demand determine utilization rate what percentage of collateral provided by lenders is used by farmers note that this ratio takes values from 0 to 100% the utilization rate itself sets the gross credit rate that is paid by the farmers kord fi receives 1/10 of the gross credit rate in the form of a reward for match making the remaining sum is what we call the net credit rate finally, the net credit rate multiplied by utilization rate gives us the deposit rate and that is the rate received by lenders so far so good right? the only remaining question is how exactly does the utilization rate affect the gross credit rate? well, it's relatively simple kord fi employs a computational algorithm that sets the rate according to utilization percentage in a piecewise linear way simply put when utilization is very low (lower demand for leverage) lenders will receive extremely low rewards when you reach the utilization rate of 80% we arrive at a sort of “plateau” where from 80 to 90% utilization rate the gross credit rate remains at 10% then as utilization creeps up to 100% the gross credit rate quickly shoots up to 50% what is the logic behind this design? it incentivizes the users to remain at a “comfortable” 80 90% utilization rate where most of the resources provided by lenders are used by farmers but the demand is not too high and the withdrawal of funds by lenders is easy