Comment on page

# Borrow Interest Rate

Regarding the issue of whether to charge loan interest, we have gone through a lot of analysis and evaluation, and also referred to the practices of most decentralized stablecoins in the market. In consideration of the stability and development of the agreement, we made a decision to charge a certain amount of interest. Of course, this interest rate is very low most of the time.
Before understanding the interest rate model, you need to understand the nouns:
• MCR = Minimum Collateral Ratio
• ICR = Individual Collateral Ratio
• TCR = Total Collateral Ratio
• CCR = Critical Collateral Ratio
• OCR = Optimal Collateral Ratio

## Interest Rate Model

We hope that the the total system collateral ratio will remain within a reasonable range, because we have introduced OCR, namely Optimal Collateral Ratio. Under normal circumstances, the borrowing rate will remain at a very low level, but once the system's mortgage rate exceeds the OCR, it will increase sharply.
The interest rate
$R_t$
follows the model:
$if \hspace{1mm} CCR > TCR: \hspace{1cm} R_t = R_{base}$
$if \hspace{1mm} CCR \leq TCR < OCR: \hspace{1cm} R_t = R_{base} + \frac{TCR - CCR}{OCR - CCR} R_{slope1}$
$if \hspace{1mm} OCR \leq TCR: \hspace{1cm} R_t = R_{base} + R_{slope1} + (\frac{TCR}{OCR}-1)R_{slope2}$
In the borrow rate technical implementation, the calculateCompoundedInterest method relies on an approximation that mostly affects high interest rates. The resulting actual borrow rate can is:
$Actual APY = (1+Theoretical APY/secsperyear)^{secsperyear}-1$

## Model Parameters

For the attributes of LSDs collateral and based on the above formula, we calculate the following data and set as the parameter:
OCR = 200%
$R_{base}$
= 0.5%
$R_{slope1}$
= 2%
$R_{slope2}$
= 10%