6. Why This Matters

Interest rates are the heartbeat of any lending protocol. By gradually increasing rates at lower utilization and accelerating them beyond a certain threshold, Comet ensures:

• Lenders (Suppliers) get rewarded fairly for providing liquidity, especially when there’s higher demand.

• Borrowers can anticipate how rates might change if the market becomes more utilized, helping them manage their borrowing costs.

• The ecosystem stays balanced over time, preventing liquidity shortages.

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