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# Interest and Borrow Rate

The borrow rate represents the prevailing interest for the borrowed asset. With each block where a loan is initiated, the borrow rate per block is multiplied by the account's current borrow amount to determine the borrow balance in the subsequent block. Consequently, the borrow balance undergoes continuous compounding with every Blast block.

The interest rate varies depending on the available liquidity.

* When capital is available: low interest rates to encourage borrowing.
* When capital is scarce: high interest rates to encourage repayments of debt and additional supplying.


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