> 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/utilization.md).

# Utilization

### **What Is Utilization?**

**Utilization** refers to the percentage of total available funds in a lending pool that have been borrowed by users. It reflects how much of the pool’s liquidity is currently in use.

**Formula:**

Utilization=Total Borrowed / Total Lent × 100%

For example:

* If a pool has **1,000 USDT deposited** and **800 USDT borrowed**,
* Then **Utilization = 80%**.

***

### **Why Is Utilization Important?**

* **For Lenders:**
  * High utilization means more of their funds are actively lent out, potentially earning **higher interest.**
  * Very high utilization, however, may **limit withdrawal flexibility**, as most funds are borrowed.
* **For Borrowers:**
  * High utilization can lead to **higher interest rates**, as demand for liquidity is strong.
  * Low utilization generally means **lower borrowing costs** and easier access to funds.
* **For the Exchange:**
  * Utilization helps balance supply and demand in the lending market.
  * It influences the **dynamic interest rate model** — interest rates often increase when utilization is high, encouraging repayment and new deposits.

***

### **Key Parameters**

* **Optimal Utilization:** The point where interest rates begin to increase rapidly to encourage more lending and loan repayments.
* **Throttled Utilization:** The utilization rate threshold where lend redeems and new borrows are paused to prevent 100% utilization.
* **Max Utilization:** The maximum utilization rate threshold where no lend redeems or new borrows are allowed, and positions may be automatically deleveraged.

{% hint style="info" %}

### **👉**[**Learn more about** Utilization](/technical-docs/borrow-and-lend/utilization-and-interest-rates.md)

{% endhint %}


---

# Agent Instructions
This documentation is published with GitBook. GitBook is the documentation platform designed so that both humans and AI agents can read, navigate, and reason over technical content effectively. Learn more at gitbook.com.

## Querying This Documentation
If you need additional information that is not directly available in this page, you can query the documentation by asking a question.

Perform an HTTP GET request on the following URL with the `ask` and `goal` query parameters:

```
GET https://support.backpack.exchange/exchange/borrow-and-lend/utilization-interest-rates-risks/utilization.md?ask=<question>&goal=<user_goal>
```

`ask` is the immediate question: it should be specific, self-contained, and written in natural language.
`goal` is what the user is ultimately trying to achieve, the reason they need the answer. Sharing it helps GitBook give you a better, more relevant answer. A goal is most helpful when it describes the outcome the user wants rather than restating the question. For example, with `ask=how do I create an API token`, a goal like `automate deployments from our CI pipeline` lets GitBook tailor the answer to that use case.

The response will contain a direct answer to the question and relevant excerpts and sources from the documentation.

Use this mechanism when the answer is not explicitly present in the current page, you need clarification or additional context, or you want to retrieve related documentation sections.