Interest Rate Model

Kink utilization curve. Borrow APR funds lender APY.

Annualized borrow rate in basis points:

if u ≤ u_opt:
  rate = base + slope1 × (u / u_opt)
else:
  rate = base + slope1 + slope2 × (u − u_opt) / (1 − u_opt)

u is utilization. Empty pool → u = 0 → rate = base.

Interest over elapsed seconds:

interest = ceil(total_borrow_assets × rate_bps × elapsed / (10_000 × 31_536_000))

A reserve-factor slice becomes accrued_protocol_fees. The rest increases total_borrow_assets and borrow_index_wad. Lender equity rises by the non-fee portion.

This is why Vanna stock pools can print a non-zero APY: borrowers exist (perps + Farm). Kamino’s xStocks market has the mint and almost no borrowers, so its rate stays at zero.