Interest & Profit

Defi Lease Interest Rate Is Based on the Present Utilization of Borrowed Funds

Table of Contents

Interest Rate Derivation

The Nolus DeFi Lease interest rate is derived from the current utilization level of borrowed funds. When a higher proportion of lent funds are borrowed, the interest rate will go up, and when the opposite is present, the interest rate will go back down. Currently, the loan interest rate calculation is exclusively reliant on the borrower's base utilization rate, however, it is planned to also consist of a more elaborate algorithm that takes into account various factors such as overall asset capitalization, trends, and asset volatility. These factors are more precisely measured due to a sequence of historical data points that further enhance the algorithm and are asset specific. Ultimately, the goal is to define an asset risk framework through key features contributing to its performance and introduce them along with different optimal borrower utilization levels and base interest rates for the different assets.

Additional parameters representing the environment’s effect in terms of expected asset dynamics will be considered as well.


There is a single Profit instance in the system. It receives amounts an interest rate margin of 4%. While most of the amounts are supposed to be in LPN currencies, there will be amounts in other supported currencies. For example, if a down payment is in BTC and the lease is in ETH, then the swapping tax might be in either of them.

The primary responsibility of this contract is to collect, then swap total amounts to NLS and transfer the total to the Treasury account. The Treasury account will incentivize lenders with rewards whose annual percentage depends on the protocol’s TVL.