Interest Rates

Interest Rates

Interest rates float and continuously compound.

An asset's interest rate is a function of utilization. Interest rates increases along with utilization until the curve shifts again when the utilization hits an optimal point. Once hitting the optimal utilization threshold, the interest rates increase at a much higher speed to dis-incentivize borrowing to get back to optimal utilization.

Since interest rates float with changing utilization, there are no guarantees that a loans interest rate will remain similar to its value at loan origination. Superposition attempts to strike a balance between predictable interest rates based on a range of acceptable utilization ratios, but may be incentivized to raise rates if high utilization creates a situation where lenders cannot withdraw their deposits.