> For the complete documentation index, see [llms.txt](https://support.backpack.exchange/llms.txt). Markdown versions of documentation pages are available by appending `.md` to page URLs; this page is available as [Markdown](https://support.backpack.exchange/exchange/borrow-and-lend/utilization-interest-rates-risks/interest-rates.md).
# Interest Rates
### **What Are Interest Rates?**
**Interest rates** represent the cost of borrowing assets or the yield earned by lenders who supply liquidity. Rates are typically **variable** and adjust dynamically based on market conditions, primarily driven by **Utilization** (the percentage of funds in the pool that have been borrowed).
***
### **How Are Interest Rates Determined?**
1. **Utilization-Based Model**
* When **Utilization is low**, borrowing demand is weak → interest rates are lower.
* When **Utilization is high**, borrowing demand is strong → interest rates increase to encourage repayment and attract more deposits.
2. **Borrower Interest Rate**
* This is the rate borrowers pay on borrowed assets.
* The rate adjusts dynamically depending on the pool’s Utilization level.
3. **Lender (Deposit) Interest Rate**
* This is the yield lenders earn by supplying assets.
* It is derived from the borrowing interest rate, after accounting for the exchange/protocol’s fee (if applicable).
***
### **Why Do Interest Rates Change?**
* **Market Supply & Demand:** More borrowing increases rates, while higher deposits reduce rates.
* **Liquidity Conditions:** High utilization raises rates to incentivize lenders to supply more liquidity.
* **Platform Risk Management:** Dynamic adjustments help maintain balance and protect against liquidity shortages.
***
### How can I view the current lending rates?
1. Click **“Lend”** to enter the Lending page.
2. You will then be able to view the **real-time borrow and lend rates** for different tokens.
{% hint style="info" %}
### **👉**[**Learn more about** Interest Rates](/technical-docs/borrow-and-lend/utilization-and-interest-rates.md)
{% endhint %}
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