Interest Rate Model 5

Interest Rate Model 5 governs DPX and MAGIC.

Maximum Risk

Interest rate model five is compromised of various governance and utility tokens; DPX and MAGIC. These tokens have the highest risks associated with them, and thus have the largest risk adjustment in interest rate. Tokens in this risk category may be subject to additional restrictions, such as the implementation of borrow caps in order to prevent large actors from being able to manipulate the market.


Suppliers in these markets will enjoy high supply rates consistent with the risks of the underlying assets. Much of the same risks as Interest Rate Model 4 are considered again in this model, in addition to additional, frequent and large swings in the underlying prices of these assets.

The combination of these risk factors mean the assets governed by Interest Rate Model 5 will earn the highest supply rates on Lodestar.


Borrowers of these assets will enjoy the benefits of being able to profitably farm up to a very high level of utilization, similar to the assets governed by Interest Rate Model 3. Borrowing and staking DPX and MAGIC will all be profitable over a large portion of the utilization curve.

Above 80% utilization, these curves again scale exponentially. In periods of extreme volatility, coins like DPX and MAGIC that have relatively shallow liquidity pools and can undergo extreme price swings when compared to ETH or BTC. This can cause periods of very high utilization, which is unhealthy for the platform and can lead to a liquidity crisis.

For this reason, Lodestar has strong incentive measures to ensure liquidity is supplied to the market by depositors and debts are repaid to the market by borrowers.

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