Interest Rate Model

The NYKE protocol uses the JumpRateModel to adjust interest rates based on market conditions, incentivizing borrowing and supplying of assets in a way that maintains market stability. The model ensures that interest rates increase more sharply after a certain utilization point (kink), thus managing the risk and encouraging optimal utilization of the market.

1. Borrow Rate Calculation:

   • The getBorrowRate function uses the utilization rate to calculate the borrow rate:

     • If utilization ≤ kink: borrowRate = baseRatePerTimestamp + (utilization * multiplierPerTimestamp) / 1e18

     • If utilization > kink: borrowRate = normalRate + (excessUtil * jumpMultiplierPerTimestamp) / 1e18

       • normalRate = baseRatePerTimestamp + (kink * multiplierPerTimestamp) / 1e18

       • excessUtil = utilization - kink

2. Supply Rate Calculation:

   • The getSupplyRate function calculates the supply rate based on the borrow rate and the reserve factor:

     • rateToPool = borrowRate * (1 - reserveFactorMantissa) / 1e18

     • supplyRate = utilizationRate * rateToPool / 1e18