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Rate Manipulation Prevention

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Last updated 1 year ago

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As the explains, when calculating the utilization rate for fixed borrows, an average of the variable pool deposits (floatingAssetsAverage) is passed to the . The reason behind this is to prevent manipulation of a fixed borrow rate: a user could deposit a significant amount in the variable pool to lower the utilization, ask for a considerably cheap fixed borrow and then withdraw the initially deposited amount.

The floatingAssetsAverage is updated with the use of damp speeds to smoothly increase or decrease the value that the actual variable pool deposits (floatingAssets) have through a short period of time. With this approach, for example, if a user deposits to the variable pool and wants to ask for a fixed borrow in the same transaction, the average will still account for the outdated value.

โœจ
InterestRateModel
Math Paper