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

# LEVF - INTEREST RATE MODEL

**Interest rate is the crucial handshake between Liquidity Providers and Yield Farmers. It must be high enough to attract the former and yet low enough for the latter to still make a profit.**

## Rising Interest Rate Model

At Levf Finance, interest on borrowing is determined by a rising interest rate curve. Interest rates range from 10% to 100% according to the utilization of the Treasury Pool, the higher the utilization the higher the interest rate.

At >0-50% utilization rate of the Treasury Pool, the interest rate will be fixed at 10%.

At >50-95% utilization rate of the Treasury Pool, the interest rate goes up linearly to 25%.

At >95-100% utilization rate of the Treasury Pool, the interest rate goes up linearly to 100%.

‌

![](/files/-Mao40rWfhdolFQPqKWf)

‌This model ensures that there is sufficient liquidity at all times for liquidity providers to make withdrawals, because a higher interest rate attracts more liquidity, as well as discourages borrowings. When additional liquidity is attracted to the Treasury Pool, utilization rate goes down again accordingly and so does interest rate.


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