# Borrowing Interest Rate

The borrowing interest rate of our leveraged yield farming product.

The goal of the bankβs incentive structure is to maximize the pool utilization (better capital efficiency) while also leaving sufficient space for the lenders to freely enter and exit the pool. This is achieved by a dynamic interest rate paid by Yield Farmers to the Bank.

The interest rate is dependent on the utilization rate: As the bigger share of BNB/BUSD deposited into the bank gets lent out to Yield Farmers, the interest rate also goes up. The interest rate model means that there are two distinct sweet spots for utilization: 80-90% (where the interest rate is actually fixed) and 90% for highly active market times (with a steep rise to disincentivize 200% utilization).

## iBNB Interest Rate Model

Utilization Rate | Interest Rate |

0-80% utilization rate | interest rate goes up linearly to 20% |

80-90% utilization rate | 20% (fixed) |

90-100% utilization rate | interest rate goes up linearly to 200% |

## iBUSD Interest Rate Model

Utilization Rate | Interest Rate |

0-80% utilization rate | interest rate goes up linearly to 10% |

80-90% utilization rate | 10% (fixed) |

90-100% utilization rate | interest rate goes up linearly to 50% |

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