Interest Rate Model

Firyx uses a dynamic interest rate model, similar to Aave, where the borrowing APR is determined by the pool's utilization rate ($U$).

$$\text{APR}_\text{borrow}={APR}_0+slope_1⋅U+slope_2⋅(max(0,U−U_{opt}))^\gamma$$

What this formula essentially means is that interest rate will rise gently as utilization increases, then sharply accelerate after the optimal utilization point ($U_{opt}$) is surpassed. The following table describes how different values of the risk factor $\gamma$ affect the interest rate curve:

Risk factor (γ)	Label	Description
0.5	Conservative	Gradual interest escalation for stable borrowing
1	Standard	Linear interest increase matching market conditions
1.5	Aggressive	Accelerated interest curve to discourage over-borrowing
2	Restrictive	Steep penalty curve for maximum utilization control