What it means
The formula a lending market uses to set its rates from how much of the pool is borrowed.
Rates rise slowly at first, then steeply past a target, called the kink, to keep money available for withdrawals.
How it works
It's why onchain rates can jump within minutes.
Related terms
| Term | What it means |
|---|---|
| Utilisation | How much of a lending pool is currently borrowed, as a share of everything supplied. |
| Borrow rate | The variable interest a borrower pays on a loan in a lending market. |
| Supply rate | The variable interest earned for supplying tokens to a lending market. |
This glossary explains terms in general. It isn't investment, tax or legal advice.