> For the complete documentation index, see [llms.txt](https://docs.extrafi.io/extra_finance/llms.txt). Markdown versions of documentation pages are available by appending `.md` to page URLs; this page is available as [Markdown](https://docs.extrafi.io/extra_finance/lending/interest-rate-model.md).

# Interest Rate Model

<figure><img src="/files/ovOFIC4mG0ZRpRqjY3EM" alt=""><figcaption></figcaption></figure>

<table><thead><tr><th width="469">Interest Model</th><th>Typicial Assets</th></tr></thead><tbody><tr><td><strong>Interest Rate Model 1:</strong><br>Borrowing rate applicable for assets with high market cap.</td><td>ETH<br>USDC</td></tr><tr><td><strong>Interest Rate Model 2:</strong><br>Borrowing rate applicable for most assets.</td><td>VELO<br>OP<br>SNX</td></tr><tr><td><strong>Interest Rate Model 3:</strong><br>Borrowing rate applicable for Stable Pool &#x26; LST Pools.</td><td>USDC (for sAMM pools)<br>DOLA<br>FRAX<br>USDR<br>wstETH<br>and other stable or LST assets</td></tr></tbody></table>

<div align="left"><figure><img src="/files/XjTISYgn2dbnLGe6G113" alt=""><figcaption><p> Borrowing Interest Rate - Appliable for assets with high market cap.<br>x-axis: utilization, y-axis: borrowing interest rate</p></figcaption></figure></div>

<div align="right"><figure><img src="/files/GLFMdGaJCS2QkhxuZ89p" alt=""><figcaption><p> Borrowing Rate - Appliable for most assets<br>x-axis: utilization, y-axis: borrowing interest rate</p></figcaption></figure></div>

Specifically, for stable and LST(Liquidity Staking Assets) pools, an interest rate model is introduced that aligns with the characteristics of 1) pegging and 2) a lower farming APY compared to volatile pools. This interest model functions similarly to a fixed borrowing rate mechanism before it hits a utilization threshold.

{% hint style="info" %}
It's important to note that the 5% fixed borrowing rate in the chart below is not a static figure but rather subject to market conditions and borrowing demand. The parameter will be regularly reviewed and updated under a governance procedure.
{% endhint %}

<figure><img src="/files/bgUi1fEY4f9KkCGoe11A" alt=""><figcaption><p>Borrowing APY for Stable &#x26; LST Pools</p></figcaption></figure>

Read more about the interest rate model here:

{% content-ref url="/pages/OeJ8nNgKSe1hPAYip7kl" %}
[Pseudo-Fixed-Interest-Rate Model](/extra_finance/lending/pseudo-fixed-interest-rate-model.md)
{% endcontent-ref %}