Interest
How borrowing is priced.
Interest is protocol revenue like any other fee: it accrues to the reserve engine and buys assets. Whether the rate is fixed, utilisation-based or governance-set is undecided.
Candidate models
| Model | Trade-off |
|---|---|
| Fixed rate | Predictable for borrowers, mispriced under stress |
| Utilisation curve | Self-balancing, harder to reason about |
| Governance-set | Flexible, introduces a discretionary actor |