What it means
The variable interest a borrower pays on a loan in a lending market.
It rises as more of the pool is borrowed, which makes borrowing less attractive and lending more attractive, until the market balances.
How it works
Lenders earn from what borrowers pay, minus the protocol's share.
Related terms
| Term | What it means |
|---|---|
| Supply rate | The variable interest earned for supplying tokens to a lending market. |
| Utilisation | How much of a lending pool is currently borrowed, as a share of everything supplied. |
| Lending market | An onchain pool where people supply money that others borrow, with the interest paid by borrowers going to those who supplied it. |
This glossary explains terms in general. It isn't investment, tax or legal advice.