Risk Models

KiloLend employs 2 specialized risk models designed to optimize lending rates and collateral requirements for different asset classes. Each model is carefully calibrated to balance yield opportunities with protocol safety.

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Stablecoin Model

Optimized for: Stable yield farming and low-risk lending

Interest Rate Parameters

Parameter	Value	Purpose
Base Rate	2%	Minimal cost when utilization is low
Multiplier	12%	Gradual rate increase with utilization
Jump Multiplier	120%	Sharp increase after optimal utilization
Kink Point	80%	Optimal utilization threshold

Rate Calculation

if utilization ≤ 80%:
    Borrow Rate = 2% + (12% × utilization / 80%)

if utilization > 80%:
    Borrow Rate = 14% + (120% × (utilization − 80%) / 20%)

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Volatile Asset Model

Optimized for: Risk-adjusted pricing reflecting market volatility

Interest Rate Parameters

Parameter	Value	Purpose
Base Rate	3%	Higher base cost reflects inherent risk
Multiplier	15%	Steeper curve accounts for volatility
Jump Multiplier	200%	Aggressive protection against over-utilization
Kink Point	80%	Earlier threshold due to higher risk

Rate Calculation

if utilization ≤ 80%:
    Borrow Rate = 3% + (15% * utilization / 80%)

if utilization > 80%:
    Borrow Rate = 18% + (200% * (utilization - 80%) / 20%)

Collateral Factors

Asset	Collateral Factor
USDT	85%
KAIA	75%
stKAIA	70%
BORA	70%
SIX	70%
MBX	70%

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Risk Parameters

Liquidation Settings

Parameter	Value	Description
Liquidation Threshold	120%	Minimum health factor before liquidation
Liquidation Incentive	8%	Bonus for liquidators
Close Factor	50%	Maximum portion of debt that can be liquidated

Health Factor Calculation

Health Factor = (Collateral Value × Collateral Factor) / Borrowed Value

Example:
- Supplied: 1,000 USDT (85% collateral factor)
- Collateral Value: 1,000 × 0.85 = 850 USDT
- Borrowed: 500 USDT
- Health Factor: 850 / 500 = 1.70

Health Factor Status:

• > 1.50: Safe position

• 1.20 - 1.50: Warning zone

• < 1.20: Liquidation eligible

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These risk models ensure KiloLend maintains optimal balance between yield opportunities and protocol security across all market conditions.