.updateInterestRates

TLDR

The updateInterestRates function serves to update the following interest rates

• liquidity interest rate

• variable borrow interest rate

• stable borrow interest rate

Typically, this function is executed after state-changes have been done (borrow, repay, supply, etc), to reflect updated rates, accounting for said action taken.

Code

.updateInterestRates

updateInterestRates will modify system-wide rates according to whether

• liquidity added: supply or repay

• liquidity removed: borrow or redeem

• In most instances, either liquidityAdded or liquidityRemoved will be a zero value, while the other is a non-zero value.

• The core logic is wrapped within .calculateInterestRates, which returns the updated rates.

Execution Flow

.calculateInterestRates

Visual Walkthrough

• get necessary ratios which will be used in the later section to examine if utilization has exceeded certain thresholds

• If borrow utilization exceeds optimal utilization, {...}, else {...}

• OPTIMAL_USAGE_RATIO and MAX_EXCESS_USAGE_RATIO are immutable; values are set within constructor.

• For in-depth explanation on why the increments are done as above, see:

  • variable rate model

  • stable rate model

• there is an additional check for stable rates

• getOverallBorrowRate simply calculates the weighted average borrow rate based off variable and stable components

• currentLiquidityRate is calculated as a component of overallBorrowRate, accounting for the portion that goes to the treasury.

Complete picture