VarlaInterestRateStrategy

A configurable kinked (two-slope) interest rate model. Below optimal utilization the rate rises gently; above it the rate rises steeply to incentivize repayment.

contracts/VarlaInterestRateStrategy.sol — inherits AccessManaged

How It Works

The interest rate follows a standard DeFi kinked curve:

Rate
 │             ╱  slope2 (steep)
 │           ╱
 │         ╱
 │       •  ← optimal utilization (kink)
 │     ╱  slope1 (gentle)
 │   ╱
 │ ╱
 └──────────────── Utilization

When utilization is below the optimal ratio, the rate equals base + slope1 × (utilization / optimal). Above optimal, the additional utilization is penalized by slope2.

Rate Parameters

struct InterestRateParams {
    uint16 optimalUsageRatio;      // In BPS (e.g. 8000 = 80%)
    uint16 baseVariableBorrowRate; // In BPS (e.g. 100 = 1%)
    uint16 variableRateSlope1;     // In BPS — gentle slope
    uint16 variableRateSlope2;     // In BPS — steep slope
}

Parameter	Constraint
`optimalUsageRatio`	Must be between 100 (1%) and 9900 (99%)
`base + slope1 + slope2`	Must not exceed `MAX_BORROW_RATE` (100,000 BPS = 1000%)

Key Function

function calculateInterestRate(
    uint256 totalLiquidity,
    uint256 totalBorrowed
) external view returns (uint256 borrowRate)

Called by VarlaPool during interest accrual. Returns the annualized borrow rate in WAD (18 decimals).

Admin Functions

Function	Description
`setPool(address)`	One-time setter — links this strategy to its pool. Reverts if already set.
`setRateParams(InterestRateParams)`	Update rate parameters. Access restricted.

View Getters

Function	Returns
`getOptimalUsageRatio()`	Current optimal utilization in BPS
`getBaseVariableBorrowRate()`	Base rate in BPS
`getVariableRateSlope1()`	Slope 1 in BPS
`getVariableRateSlope2()`	Slope 2 in BPS
`getMaxVariableBorrowRate()`	base + slope1 + slope2 in BPS
`getRateParams()`	Full `InterestRateParams` struct

Events

event RateParamsUpdated(
    uint16 optimalUsageRatio,
    uint16 baseVariableBorrowRate,
    uint16 variableRateSlope1,
    uint16 variableRateSlope2
);
event PoolSet(address pool);

✦ Key Takeaways

Standard kinked rate model — gentle slope below optimal, steep slope above
All parameters in basis points (BPS), rate output in WAD
Pool address is set once and cannot be changed
Rate params updatable by risk manager role via AccessManaged