Title: Potential adjustment to Supply APY/Supply APY Calculation for sfrxETH/FRAX pair on Fraxlend V3
Author(s): Anthias.xyz Team
Date of Submission: 9 June 2023
The Anthias team has been reviewing a few Fraxlend V2 and V3 pairs, and we noticed that the Utilization Rate has been hovering near 87% over the past several days for the sfrxETH/FRAX pair on Fraxlend V3. With over $46M in value lent to this pair, and over $40M in value borrowed, this is a significant pair in the Frax ecosystem, and we are wondering if the Frax community would be interested in adjusting the current calculation for the Time Weight Variable Interest Rate (linked here Interest Rates - Frax Finance ¤) in order to raise the Supply and Borrow APYs for this pool as it has crossed the desired utilization rate of 75-85%.
Value available to borrow from this pair has been consistently decreasing over the past month, making this an opportune time to make sure that rates are set so that further supply is incentivized in order to allow for more borrowing and not result in a situation of 90%+ utilization.
The current Minimum Rate is 0%. Potentially, this could be raised to 1% in order to more rapidly increase rates through this formula. This will allow for better utilization and more revenue for the protocol.
This is an open discussion regarding supply/borrow APYs for this pair specifically and the Time Weight Variable Interest Rate more generally. We look forward to hearing the community’s thoughts regarding this proposal.