# Example Scenarios

#### **Scenario 1: Low Utilization**

* **Pool Size:** $1,000,000
* **Borrowed:** $300,000
* **Utilization Ratio:** 300,000 ÷ 1,000,000 = 30%
* **Interest Rate:** 3% (low due to underutilization).
* **Result:** Encourages borrowing activity to increase utilization.

#### **Scenario 2: High Utilization**

* **Pool Size:** $1,000,000
* **Borrowed:** $950,000
* **Utilization Ratio:** 950,000 ÷ 1,000,000 = 95%
* **Interest Rate:** 15% (high to attract more liquidity providers).
* **Result:** Encourages liquidity providers to deposit more funds.

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