Interest Rate Model
For supplier:
When matched: P2P supply APY (which is higher than the underlying supply APY)
When unmatched: Underlying supply APY
For borrower:
When matched: P2P borrow APY (which is lower than the underlying borrow APY)
When unmatched: Underlying borrow APY
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(%)
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