Interest Rate Model

Interest rate model

For supplier:

• When matched: P2P supply APY (Dark Blue)

• When unmatched: Underlying supply APY (Light Blue)

For borrower:

• When matched: P2P borrow APY (Purple)

• When unmatched: Underlying borrow APY (Pink)

Key Terms

P2P cursor

The P2P cursor is specifically used within Evoq to denote a P2P rate within the range between the underlying supply APY and the underlying borrow APY. It depends on the type of asset and the matching status. It is a number between 0 and 1, indicating its P2P rate at the corresponding percentile between the underlying supply APY and the underlying borrow APY.

P2P rate

The P2P rate serves as the reference rate for calculating the P2P supply APY and P2P borrow APY. P2P rate = P2P cursor × Underlying borrow APY + (1 - P2P cursor) × Underlying supply APY

Reserve factor

The reserve factor refers to the percentage of the APY spread that is allocated to the protocol reserve.

P2P supply APY

P2P supply APY = P2P rate - Reserve factor × (P2P rate - Underlying supply APY)

P2P borrow APY

P2P borrow APY = P2P rate + Reserve factor × (Underlying borrow APY - P2P rate)

Example

- Underlying supply APY: 2% - Underlying borrow APY: 12% - P2P cursor: 0.48 - P2P rate = 0.48 × 12 + (1 - 0.48) × 2 = 6.8(%) - Reserve factor: 20% - P2P supply APY = 6.8 - 0.2 × (6.8 - 2) = 5.84(%) - P2P borrow APY = 6.8 + 0.2 × (12 - 6.8) = 7.84(%)