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How Interest Rates Work on Juncta

Juncta uses a dynamic interest rate model that adjusts continuously based on market conditions. Unlike protocols with fixed rates, Juncta’s rates update on every block in response to two signals:
  • how much of the available lending supply is currently being borrowed,
  • and how volatile the underlying assets are.
This means both borrowers and lenders always see rates that reflect actual market conditions rather than a static schedule.

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Borrow Rate

The borrow rate is what you pay as a borrower on your outstanding loan. It is calculated as follows: Borrow Rate = Base Rate + (Utilisation Multiplier × Utilisation%) + (Volatility Premium × Volatility Index) There are three components to this formula. Base Rate The base rate is the floor rate charged when utilisation is near zero and market conditions are calm. It is set at 2% APY. You will never pay less than this regardless of how low utilisation is. Utilisation Multiplier Utilisation refers to how much of the total available lending supply is currently being borrowed. As more of the supply is borrowed, the borrow rate increases.
UtilisationBorrow Rate
0%2% APY
80%20% APY
80% to 100%20% to 150% APY
Between 0% and 80% utilisation, the rate scales linearly from 2% to 20% APY. Once utilisation crosses 80%, the rate enters a steep jump multiplier that scales aggressively from 20% up to 150% APY. This jump is intentional — it creates a strong incentive for new lenders to supply capital and for existing borrowers to repay, protecting the liquidity available to lenders who want to withdraw. Volatility Premium On top of the utilisation rate, Juncta adds a volatility premium that reflects the current risk environment of the underlying assets. This premium ranges from 0% to 10% APY and is derived from the bin crossing frequency in the relevant pools — a measure of how actively price is moving. During calm market conditions the premium is close to zero. During high volatility it increases to compensate lenders for the additional risk they are taking on.

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Supply Rate

The supply rate is what you earn as a lender for depositing assets into Juncta’s lending market. It is calculated as follows: Supply Rate = Borrow Rate × Utilisation% × (1 - Reserve Factor) The reserve factor is set at 10%. This means 10% of all interest paid by borrowers is retained by the protocol. The remaining 90% is distributed to lenders as the supply rate. At typical conditions — 70% utilisation and a 14% average borrow rate — the supply rate works out as follows: 14% × 70% × 0.90 = 8.82% APY As utilisation rises, the supply rate rises with it because both the borrow rate and the utilisation multiplier in the formula increase simultaneously. This is what makes lending on Juncta more attractive during periods of high borrowing demand.

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What This Means for Borrowers

As a borrower, your cost of capital is not fixed. It will change over the life of your loan as utilisation and volatility fluctuate. A loan that costs 8% APY during a quiet period can cost meaningfully more during a high-demand or volatile period. Juncta’s dashboard shows your current borrow rate and the total interest accrued on your position updated every block. Keep an eye on your borrow rate relative to the yield your collateral is generating. If your borrow rate rises above the yield your position is earning, the economics of your loan are working against you.
Interest accrues continuously on your outstanding borrow and adds to your total borrow value over time. This puts gradual downward pressure on your health factor even if your collateral value stays the same. Factor this into how you monitor your position.

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What This Means for Lenders

As a lender, your supply rate rises when borrowing demand is high and falls when it is low. The jump multiplier above 80% utilisation is particularly significant for lenders. It means that during periods of very high demand, supply rates can increase substantially, making it an attractive time to deposit. At the same time, very high utilisation means less liquidity is immediately available for withdrawals. If you need to withdraw your supplied assets and utilisation is above 80%, you may need to wait for borrowers to repay before the full amount becomes available.
The jump rate above 80% utilisation is designed to resolve high utilisation conditions quickly by attracting new supply. In practice, sustained utilisation above 80% is self-correcting — the elevated rates bring in new lenders and encourage borrowers to repay.

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Pool-Level Rate Differences

Interest rates on Juncta are calculated per asset rather than as a single protocol-wide rate. Each asset has its own utilisation level and volatility index, which means borrow and supply rates will differ across assets. Stable assets with low volatility and moderate utilisation will have lower rates than volatile assets with high borrowing demand. You can view the current borrow rate, supply rate, and utilisation level for every supported asset in the lending market section of Juncta’s analytics dashboard.