LogoLogo
V2 DocsV2 dApp
English 🇬🇧
English 🇬🇧
  • Welcome to Folks Finance official documentation!
  • Getting started
  • HOW TO
    • Deposit
    • Lock & Earn
    • fStaking
    • Withdraw
    • Borrow
    • Rebalance
    • Repay
    • Rewards aggregator
    • Algo Liquid Governance
      • Algo Liquid Governance - G3
  • User profile
    • Dashboard
    • History
    • Notifier
  • Developer
    • Contracts
    • Official SDKs
  • Protocol architecture
    • Overview
      • Liquidity pool dynamics
      • Interest rates model
      • Interest accrual
      • Deposit
      • Withdraw
      • Borrow
      • Slippage
      • Liquidation
      • Algo Liquid Governance
      • Incentive system
      • fStaking
      • Token types
  • Security
    • Audits
    • Bug bounty
  • Support
    • FAQ
    • Glossary
    • Fees
  • helpful guides
    • Creating a My Algo Wallet
    • Buying Algo using FIAT - CEXs guide
    • Buying Algo with FIAT - Pera wallet/MyAlgo wallet guide
    • Allowing pop-up
    • Folks Finance's Testnet
  • Community
    • What can I do with gALGO?
    • Aeneas liquidity program
    • Contact
    • Community treasury
    • FOLKS
  • Legal
    • Privacy Policy
    • Terms & Conditions
    • Disclaimer
Powered by GitBook
On this page
  • Borrow Interest Rate
  • Deposit Interest Rate
  • ALGO Interest Rate

Was this helpful?

  1. Protocol architecture
  2. Overview

Interest rates model

How the borrow and the deposit interest rates are computed

PreviousLiquidity pool dynamicsNextInterest accrual

Last updated 2 years ago

Was this helpful?

Borrow Interest Rate

The borrow interest rate ibti_{b_t}ibt​​is algorithmically computed for each pool and considering the parameters, defined in the chapter: UUU, UoptU_{opt}Uopt​, R0R_0R0​, R1R_1R1​, R2R_2R2​.

If UtU_tUt​ < UoptU_{opt}Uopt​

ibt=R0+UtUopt∗R1i_{b_t}=R_0+\frac{U_t}{U_{opt}} * R_1ibt​​=R0​+Uopt​Ut​​∗R1​

If UtU_tUt​ ≥ UoptU_{opt}Uopt​

ibt=R0+R1+Ut−Uopt1−Uopt∗R2i_{b_t}=R_0+R_1+\frac{U_t-U_{opt}}{1-U_{opt}}* R_2ibt​​=R0​+R1​+1−Uopt​Ut​−Uopt​​∗R2​

Deposit Interest Rate

It represents the distribution of the interest paid by borrowers, net of a fee retained to feed the Folks Finance . The distribution rate of the interest on deposits is also strongly influenced by the UtU_tUt​ of the pool and the borrow interest rate ibti_{b_t}ibt​​:

idt=Ut∗ibt∗(1−RR)i_{d_t}=U_t * i_{b_t} * (1-RR)idt​​=Ut​∗ibt​​∗(1−RR)

ALGO Interest Rate

Considering the ALGO participation rewards obtained by holding the token in the wallet, the mathematics of interest and the deposit rates of the users that interact with the ALGO/fALGO pool are adjusted to take them into account.

The ALGO borrow interest rate is computed as follows:

For the same reason, the interest rate of the deposits has increased by the quote of rewards that the protocol pays to the user who deposited ALGOs in the liquidity pool.

The retention rate RRRRRR represents the percentage of the revenue kept by the protocol from the interest paid by the borrowers. These protocol revenues are sent to the .

If UtU_tUt​ < UoptU_{opt}Uopt​

ibtAlgo=rewards+R0+UtUopt∗R1i^{Algo}_{b_t}=rewards + R_0+\frac{U_t}{U_{opt}} * R_1ibt​Algo​=rewards+R0​+Uopt​Ut​​∗R1​

If UtU_tUt​ ≥ UoptU_{opt}Uopt​

ibtAlgo=rewards+R0+R1+Ut−Uopt1−Uopt∗R2i^{Algo}_{b_t}=rewards + R_0+R_1+\frac{U_t-U_{opt}}{1-U_{opt}}* R_2ibt​Algo​=rewards+R0​+R1​+1−Uopt​Ut​−Uopt​​∗R2​

The rewardsrewardsrewards factor corresponds to the percentage of rewards provided by the Algorand protocol, which would be paid directly to the user's wallet taking the loan if they had if he had left the ALGOs in their wallet (participating in the reward program). This increases the interest rate equal to the rewards percentage.

idtAlgo=rewards+Ut∗(ibt−rewards)∗(1−RR)i^{Algo}_{d_t}=rewards + U_t * (i_{b_t}- rewards) * (1-RR)idt​Algo​=rewards+Ut​∗(ibt​​−rewards)∗(1−RR)
Liquidity pools dynamics
community treasury
community treasury