# Interest Rate Adjustments

Nebula uses an algorithmic interest rate model to ensure balance in liquidity pools:

#### **Low Utilization**

* When the utilization ratio is low (e.g., <50%), interest rates decrease to attract more borrowing.

#### **High Utilization**

* When the utilization ratio is high (e.g., >90%), interest rates increase to incentivize liquidity providers to deposit more assets.

#### **Optimal Utilization Range**

* The target utilization range (e.g., 60%-80%) is predefined for each pool.
* Rates are calibrated to maintain this range, ensuring efficient liquidity utilization.

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