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Parameters

There is an explanation of the following parameters in Model Parameters.

A. Reserve Factor

η=5%\begin{align*} \eta = 5\% \end{align*}
η\eta
the fraction of the total Variable Rate Pool deposits established as Liquidity Reserves can't be borrowed and will only be available for withdrawals.

B. Treasury Fee

The treasury fee refers to the percentage of interest rate charges paid by borrowers that the protocol retains for its treasury.
Treasury Fee on OP Mainnet
λr=20%\begin{align*} \lambda_r = 20\% \end{align*}
Treasury Fee on Ethereum Mainnet
λr=0%\begin{align*} \lambda_r = 0\% \end{align*}

C. Optimism Mainnet Interest Rate Curves

USDC
Parameter
Value
AA
=
1.2111e-02
BB
=
2.5683e-02
UmaxU_{max}
=
1.30
Uliq0U_{liq}0
=
0.75
ksigmoidk_{sigmoid}
=
2.50
αα
=
1.10
WETH
Parameter
Value
AA
=
1.4293e-02
BB
=
9.0055e-03
UmaxU_{max}
=
1.30
Uliq0U_{liq}0
=
0.70
ksigmoidk_{sigmoid}
=
2.50
αα
=
1.40
wstETH
Parameter
Value
AA
=
1.4293e-02
BB
=
9.0055e-03
UmaxU_{max}
=
1.30
Uliq0U_{liq}0
=
0.70
ksigmoidk_{sigmoid}
=
2.50
αα
=
1.40
OP
Parameter
Value
AA
=
2.9687e-02
BB
=
2.6122e-04
UmaxU_{max}
=
1.20
Uliq0U_{liq}0
=
0.70
ksigmoidk_{sigmoid}
=
2.50
αα
=
1.20
WBTC
Parameter
Value
AA
=
6.2007e-02
BB
=
2.3838e-02
UmaxU_{max}
=
1.50
Uliq0U_{liq}0
=
0.70
ksigmoidk_{sigmoid}
=
2.50
αα
=
1.20

D. Ethereum Mainnet Interest Rate Curves

WETH

Parameter
VRP Value
FRP Value
AA
=
1.9362e-2
3.8126e-1
BB
=
-1.787e-3
-3.6375e-1
UmaxU_{max}
=
1.003870947
1.000010695

DAI

Parameter
VRP Value
FRP Value
AA
=
1.7852e-2
3.9281e-1
BB
=
-2.789e-3
-3.7781e-1
UmaxU_{max}
=
1.003568501
1.000014451

USDC

Parameter
VRP Value
FRP Value
AA
=
1.4844e-2
3.9281e-1
BB
=
1.9964e-4
-3.7781e-1
UmaxU_{max}
=
1.002968978
1.000014451

WBTC

Parameter
VRP Value
FRP Value
AA
=
2.7194e-2
4.6586e-1
BB
=
3.0160e-2
-4.1345e-1
UmaxU_{max}
=
1.007776377
1.050553997

wstETH

Parameter
VRP Value
FRP Value
AA
=
1.9362e-2
3.8126e-1
BB
=
-1.787e-3
-3.6375e-1
UmaxU_{max}
=
1.003870947
1.000010695

OP

Parameter
VRP Value
FRP Value
AA
=
2.8487e-2
3.5815e-1
BB
=
-5.8259e-3
-3.3564e-1
UmaxU_{max}
=
1.005690787
1.000005527
These parameters are utilized to calculate the effective borrow interest rate.

D. Risk Factors

Ethereum Mainnet

Asset
Value
WETH
0.86
DAI
0.90
USDC
0.91
WBTC
0.85
wstETH
0.82
OP
N/A

OP Mainnet

Asset
Value
WETH
0.86
DAI
N/A
USDC
0.91
WBTC
0.78
wstETH
0.82
OP
0.35

Goerli Testnet

Asset
Value
WETH
0.86
DAI
0.90
USDC
0.91
WBTC
0.85
wstETH
0.82
OP
N/A
We associate a Risk-Adjust Factor to each asset to assess each collateral asset's borrow and lending power.
To assess the Risk-Adjust Factor for each asset in the protocol, you can query the markets() function of the Auditor contract. This can be done using Etherscan, a blockchain explorer.
Follow the steps below to check the Risk-Adjust Factor for a specific asset:
  1. 1.
    InGo to the Auditor contract on Etherscan by navigating to the following URL: https://etherscan.io/address/0x310A2694521f75C7B2b64b5937C16CE65C3EFE01#readProxyContract#F17 (for other networks, go to Smart Contract Addresses and click on the address of the desired Auditor contract)
  2. 2.
    To query the markets In that contract, you will need the market contract address for the specific asset. For example, you can use the following address to check the Risk-Adjust Factor for USDC: 0x660e2fC185a9fFE722aF253329CEaAD4C9F6F928. All addresses for each network (Mainnet, Optimism, et al.) are available in Smart Contract Addresses.
  3. 3.
    Click the "Query" button to call the function. The result will display various information about the market, including the Risk-Adjust Factor.
  4. 4.
    The Risk-Adjust Factor will be returned as adjustFactor. In this case, 910000000000000000 equals to 0.91.
Following these steps, you can check the Risk-Adjust Factor for any asset in the protocol by simply replacing the market contract address with the one corresponding to the desired asset.

E. Variable Rate Pool Fee

δ=10%\begin{align*} \delta = 10\% \end{align*}
δ\delta
is the fraction of the fixed interest rate fees retained by the Variable Rate Pool upon leaving the Fixed Rate Pool.

F. Supply E.M.A. Parameters

βslow=0.0046\begin{align*} \beta_{slow} = 0.0046 \end{align*}
The time decay parameter is used when the supply is above average.
βfast=0.4000\begin{align*} \beta_{fast} = 0.4000 \end{align*}
The time decay parameter is used when the supply is below average.

G. Target Solvency Ratio

Γ=1.25\begin{align*} \Gamma = 1.25 \end{align*}
Target solvency ratio after liquidation.

H. Liquidation Bonuses

νliquidator=5.00%νbaddebt=0.25%\begin{align*} \nu_{liquidator} = 5.00\% \\ \nu_{bad-debt} = 0.25\% \end{align*}
During the liquidation process, the liquidator gets a commission fee, and the Variable Rate Pool receives a percentage of extra liquidation fees to compensate for potential bad debt residuals.

I. Extraordinary Earnings Distribution Factor

ξextearn=2.00\begin{align*} \xi_{extearn} = 2.00 \end{align*}

J. Penalty Rate

DailyPenaltyRate=0.45%\begin{align*} DailyPenaltyRate = 0.45\% \end{align*}
The daily penalty rate fee is charged to fixed interest rate borrowers who didn't pay their loans on time. This fee is charged daily after the maturity day.
For example, if your total debt after the maturity date is $100, and you pay 10 days later, the penalty fees will be $4.5 (0.45%*10*$100).