💹Supply Rates

Details on how Supply Rates are determined

In Echelon Markets, when users borrow assets, the interest they pay is allocated as a yield to those who supplied those assets, creating the supply rate. A portion is set aside for the ecosystem reserve, as dictated by the reserve factor. This mechanism ensures that the yield generated from borrowed assets is equitably shared among all suppliers, contributing to the liquidity of the protocol.

The supply Annual Percentage Yield (APY) depends on several factors:

  • Utilization ratio: The proportion of lent out assets to the total available supply.

  • Variable rate: The interest rate applied to loans with rates that can fluctuate based on market conditions.

  • Reserve factor: The percentage of yield redirected to the protocol's liquidity reserve.

Supply rates may also be subsidized by other token incentives on a pool by pool basis. The most up to date information about the supply APY for each asset may be viewed on the Core Markets interface.

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