Blendy
  • Overview
  • Key Concepts
  • Participant Roles
  • Roadmap
  • 🧩 BLENDY MODULES
    • Moon Module
      • Key Components
      • Option Strategies
      • Risk Management and Hedging
      • Examples
  • Throttle Module
    • Throttle Module Explained
    • Formulas and Calculations
    • Example
  • Liquidation Process
  • 🔒 Security
    • Audit
    • Bug Bounty
  • BRAND ASSETS
    • Brand Asset Kit
Powered by GitBook
On this page
  1. Throttle Module

Example

PreviousFormulas and CalculationsNextLiquidation Process

Last updated 9 months ago

TL;DR of these cases:

1) High Demand/Low Supply -> High Borrow Rate

2) Low Demand/High Supply -> Low Borrow Rate

3) Demand ≈\approx≈ Supply -> Base Borrow Rate

To better understand the functionality of the Throttle Module, let's consider two scenarios:

  1. Scenario 1: High Demand, Low Supply

Let's calculate the New Borrow Rate for the following conditions:

  • ΔBΔBΔB (borrow velocity) = 10%

  • ΔSΔSΔS (supply velocity) = 2%

  • CRCRCR(critical ratio) = 3

  • Base Borrow Rate = 5%

Calculation based on formulas: New Rate=5%×(1+0.2×(5−3))+0.05=5.85New Rate=5\%×(1+0.2×(5−3))+0.05=5.85%New Rate=5%×(1+0.2×(5−3))+0.05=5.85

Result: The Borrow Rate increases to curb excessive borrowing.

  1. Scenario 2: Balanced Demand and Supply

  • ΔBΔBΔB and ΔSΔSΔS are balanced (ΔB/ΔS=CR)(ΔB/ΔS = CR)(ΔB/ΔS=CR)

Result: No adjustment needed. Rates stay at base levels.