Interests
LayerBank uses utilization-based interest-rate models so lending markets can react to changing liquidity and borrowing demand.
Interest Rate Model
Interest rates are dynamic rather than fixed. The model is designed to balance two competing needs: keeping enough liquidity available for withdrawals and maintaining efficient borrowing demand.
Utilization Rate (U)
Utilization measures how much supplied liquidity is currently borrowed.
- Lower utilization: borrowing is generally cheaper because more liquidity is available.
- Higher utilization: borrow rates generally rise, encouraging repayment and attracting additional supply.
Borrower Interest Rate
LayerBank deployments can use a kinked or double-slope rate curve. Below an optimal utilization point, rates increase more gradually. Above the optimal point, rates can rise faster to protect available liquidity.
Supplier Interest Rate
Supplier yield is derived from borrower interest, utilization and the market's reserve factor. In simplified form:
Rewards and underlying asset yield may be shown separately from the base supply rate.
Key Takeaways
- Rates react to on-chain market demand.
- High utilization can increase both borrow cost and supplier incentives.
- Reward APR should be separated from base interest when comparing markets.
- Current app values are more relevant than historical examples.
Reviewed for layerbank.trade on November 2, 2026.