Interest Rate Model

How utilization influences PrimeFi's variable borrow and supply rates.

Variable rates and utilization

PrimeFi configures an interest-rate strategy for each reserve. The strategy uses reserve utilization, denoted by U, to calculate the variable borrow rate and the liquidity rate applied to suppliers.

As of 16 September 2026, every live PrimeFi v2 reserve on Base, HyperEVM, and XDC has stable-rate borrowing disabled.

• When utilization is below the configured optimal level, the variable borrow rate increases along a lower slope.

• Above the optimal level, the rate increases along a steeper slope.

Higher rates can encourage repayment or additional supply, but they do not guarantee that reserve liquidity will return. At high utilization, withdrawals and new borrows can remain constrained.

Two-slope model

For a reserve with optimal utilization U_optimal, base rate R₀, and configured slopes:

$$\text{if } U \leq U_{\text{optimal}} : \quad R_t = R_0 + \frac{U_t}{U_{\text{optimal}}} R_{\text{slope1}}$$

$$\text{if } U > U_{\text{optimal}} : \quad R_t = R_0 + R_{\text{slope1}} + \frac{U_t - U_{\text{optimal}}}{1 - U_{\text{optimal}}} R_{\text{slope2}}$$

Actual rates depend on the deployed strategy and current reserve state. Check the live app and on-chain configuration rather than relying on example parameters.

PrimeFi's model inherits Aave v2 concepts. For background on the two-slope model, see Aave's current Interest Rate Strategy documentation; PrimeFi's deployed implementation and parameters remain distinct and should be read on-chain.