Fervent Finance uses the Jump Rate Model (JumpRateModelV2) to determine interest rates for lenders and borrowers. This model was made popular by Compound V2 and creates stable rates under normal conditions, with a sharp increase in interest when utilization gets too high.
What is Jump Rate Model?
Instead of a single curve, the Jump Rate Model has a kink point (also called the "optimal utilization rate"). Before the kink, interest rates rise slowly. After the kink, interest rates increase aggressively to prevent the pool from running out of liquidity.
Key Parameters
Base Rate: Minimum interest when utilization is zero
Multiplier: Rate slope before the kink
Jump Multiplier: Steeper slope after the kink
Kink (Optimal Utilization): The utilization point where rates "jump"
Visual Example (Hypothetical)
Utilization Range
Borrow APR (Example)
0% – 80%
Slowly rising from 2% to ~10%
Above 80%
Jumps sharply up to 20% – 40%+
If utilization is < 80%, the borrow rate increases gradually.
Above 80%, borrow rates spike to discourage borrowing and attract more supply.
Supply Rates
Supply APY = (Borrow APY × Utilization Rate × (1 – Reserve Factor))
So as borrow rates go up, suppliers earn more too.
