# APY Calculation

The APY Function contains calculations that impact Pool behaviour. Please do your own research and interact at your sole responsibility.

## APY

The Annual Percentage Yield (“APY”) is the current annual interest rate, and it is based on the pool utilization at any given moment. The more assets are borrowed, the higher the utilization and interest rate for all participants.

An example with config parameters is depicted below, and each Pool can have different parameters, configurable by Admin at this stage.

### utilization [0-1]

Utilization represents the ratio between total assets borrowed and the total deposits in a given pool.

total_deposit - total deposit balances in the Pool total_borrow - total borrow balances from the Pool

### APY Params

base - the initial APY for borrowers
base_multiplier - defines the steepness of the APY curve, while utilization is **below** the kink
multiplier - defines the steepness of the APY curve, while utilization is **above** the kink
kink - configurable utilization level when a different APY calc model is enforced

Typical values are: base [0-1], kink [0-1], base_multiplier [0-0.3], multiplier [0.3-10]

### Borrow APY & Deposit APY

Implementation of the APY/utilization dependency function is described below. Based on the Pool APY Params described above, the functions are as follows.

Miscalculating rates could cause pool leakage.

Where reserve_factor is a configurable %, going to the Pool reserve. More in Risk Mitigation.

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