Apollo Protocol
  • GET STARTED
    • What is Apollo Protocol?
    • What is SORA Network?
    • What is Polkaswap?
    • How to use?
  • Function
    • Depositing
    • Borrowing
    • Liquidation
    • Governance
    • Farming & Staking
  • Assets
    • Listed tokens
    • Risk parameters
    • Utilization rate
    • Interest rate model
  • Tokenomics
    • Native token
    • Allocation
    • Circulation
    • Airdrop
    • Lenders & Borrowers allocation
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  1. Assets

Utilization rate

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Last updated 11 months ago

Each asset on the Apollo protocol has its own Utilization rate (U):

U=TotalBorrows/TotalLiquidityU=TotalBorrows/TotalLiquidityU=TotalBorrows/TotalLiquidity

  • TotalBorrows - The total asset amount (in dollars) borrowed by the protocol users

  • TotalLiquidity - The total asset amount (in dollars) present on the protocol

The Utilization rate (U) monitors how much of an asset's reserves are borrowed in a given time frame (t).

As the U value approaches 100%, the asset becomes scarcer. If it reaches 100%, there is no more liquidity available for that asset. This situation poses a problem, as depositors run the risk of being unable to retrieve their assets from the protocol due to their unavailability.

Nevertheless, high U results in high returns for depositors. It's therefore essential to maximize utilization while protecting their liquidity.

Monitoring historical U rates is recommended, as it can assist in tracking emerging risks related to the liquidity shortage of a specific asset on the protocol.