> For the complete documentation index, see [llms.txt](https://docs.thora.finance/llms.txt). Markdown versions of documentation pages are available by appending `.md` to page URLs; this page is available as [Markdown](https://docs.thora.finance/protocol/interest-rate-model.md).

# Interest Rate Model

## Interest Rate Model

### Borrow APR**​** <a href="#borrow-apr" id="borrow-apr"></a>

[`= Base + Multiplier * min(UtilizationRate, Kink) + max(JumpMultiplier * UtilizationRate - Kink, 0)`](#user-content-fn-1)[^1]

### Supply APR <a href="#supply-apr" id="supply-apr"></a>

`= Distribute (Interest Paid by Borrowers Per Block - Reserve) to all suppliers, and convert it into APY`

`= Distribute [(1 + Borrow APY) ^ (1 / BlocksPerYear) - 1] * Total Borrow * (1 - Reserve Factor) to all suppliers, and convert it into APY`

`= {[(1 + Borrow APY) ^ (1 / BlocksPerYear) - 1] * Total Borrow * (1 - Reserve Factor) / Total Supply}, and convert it into APY`

`= {1 + [(1 + Borrow APY) ^ (1/BlocksPerYear) - 1] * Total Borrow * (1 - Reserve Factor) / Total Supply} ^ BlocksPerYear - 1`

[^1]: