5. Supply and Borrow Interest Rates vs. Utilization Rate Chart

Chart Breakdown: Supply and Borrow Interest Rates vs. Utilization Rate

• X-Axis (Utilization Rate):

  • Represents the percentage of the base asset borrowed relative to its total supply (0% to 100%).

• Y-Axis (Interest Rate):

  • Shows the percentage interest rates for suppliers (blue curve) and borrowers (red curve).

• Supply Rate Curve (Blue):

  • Gradually increases as the utilization rate rises, reflecting the earnings for supplying assets.

• Borrow Rate Curve (Red):

  • Rises steadily before 80% utilization and sharply increases after the kink point.

• Kink Point (80% Utilization):

  • Marked with a dashed line, it indicates the threshold where borrowing costs escalate due to higher utilization risk.

• Annotation:

  • A note clarifies that collateral assets do not earn or pay interest.