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DeFi Interest Rate Models Explained: How Algorithms Control Lending and Borrowing Rates

DeFi Interest Rate Models Explained: How Algorithms Control Lending and Borrowing Rates

5 Feb 2026

DeFi lending platforms set interest rates automatically using smart contracts. This guide explains how utilization rates, kinked models, and protocols like Aave and Compound determine your yields and borrowing costs in crypto lending.

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