💰Earn

How Pluto Earn Vault works

Lenders deposit assets into the Earn Vault with the expectation of receiving steady interest from borrowers. The supply rate that lenders received is dynamically determined by the borrow rate, which is calculated based on the current utilization rate.

The more assets being borrowed, the higher the Utilization Rate.

The higher the Utilization Rate, the higher the Borrow Rate.

Utilization Rate

The utilization rate represents the percentage of borrowed assets compared to the total assets available for borrowing.

$$UR = \frac{TD}{TS} \\~\\ \begin{align*} UR &: \text{Utilization Rate} \\ TD &: \text{Total Debt in USD} \\ TS &: \text{Total Supply in USD} \end{align*}$$

Supply Rate (APY)

The supply rate is what lenders receive, and it’s calculated based on the borrow rate and the utilization rate. As more assets get borrowed (which increases the utilization rate), the borrow rate goes up, and the supply rate follows suit.

$$SR = (BR \times UR) - SF \\~\\ \begin{align*} SR &: \text{Supply Rate APY} \\ BR &: \text{Borrow Rate APY} \\ UR &: \text{Utilization Rate} \\ SF &: \text{Supply Fee} \end{align*}$$

This relationship means that as the demand for borrowing increases, lenders will see higher returns on their supplied assets.