Rate Card

Numbers on this page are proposed, not final. A two-slope kinked interest rate model with a steep panic zone above 80% utilization, a 25% reserve factor that funds the bad-debt backstop, and a 12% liquidation bonus split 8/4 between the liquidator and the reserve. Three calibration tiers below — conservative / base / aggressive — bracket the parameter space the protocol will pick from at audit. Lender APY is purely a function of borrower interest; the protocol takes no fee on deposits. Final values are fixed at the official launch.

The interest rate model, derived

Pool utilization at any moment is the share of deposits currently lent out:

$$U \;=\; \frac{B}{D}, \qquad B = \text{total borrowed},\;\; D = \text{total deposited}.$$

The borrow APR is a continuous, two-piece-linear function of utilization with a kink at $U^\*$:

$$R_b(U) \;=\; \begin{cases} R_0 \;+\; s_1 \cdot \dfrac{U}{U^\*}, & 0 \le U \le U^\* \\[6pt] R_0 \;+\; s_1 \;+\; s_2 \cdot \dfrac{U - U^\*}{1 - U^\*}, & U^\* < U \le 1 \end{cases}$$

with $R_0$ the base rate, $s_1$ the gentle-zone slope, $U^\*$ the kink (the optimal utilization), and $s_2$ the panic-zone slope. The shape is identical to Aave v3's stable-asset model and Compound v3 — what differs is calibration. Aave v3 USDC uses $(R_0, s_1, U^\*, s_2) \approx (0\%, 4\%, 80\%, 75\%)$; Compound v3 USDC uses $U^\* \approx 93\%$ to tolerate higher utilization. Forge's proposed base is gentler than both because ZAP is a more volatile collateral than USDC.

Lenders are paid interest funded entirely by borrowers, less the reserve factor $\phi$:

$$R_l(U) \;=\; R_b(U) \cdot U \cdot (1 - \phi).$$

The factor of $U$ enters because lenders only earn on the lent fraction of the pool — idle capital pays nothing. The $(1-\phi)$ factor is the share net of reserve, which routes to the bad-debt backstop and protocol operations.

Closed-form lender APY at the kink

A useful sanity check: at $U = U^\*$, the borrow rate is $R_b(U^\*) = R_0 + s_1$ and lender APY collapses to

$$R_l(U^\*) \;=\; (R_0 + s_1) \cdot U^\* \cdot (1 - \phi).$$

For the proposed base parameters $(R_0, s_1, U^\*, \phi) = (4\%, 8\%, 80\%, 25\%)$, the lender APY at the kink is $0.12 \cdot 0.80 \cdot 0.75 = 7.2\%$. Above the kink the borrower curve gets steep fast, and so does $R_l$ — the asymmetry is intentional, see the panic-zone discussion below.

The curve, plotted

Borrow APR vs. utilization for the proposed base calibration. Below the kink, rates rise gently from 4% to 12%. Above 80%, the slope jumps 7.5×, reaching 72% APR at full utilization — by design unattractive to borrowers, lucrative to lenders, and protective of the lender-side withdrawal buffer.

Three calibration tiers

The numbers below are the corners of the parameter space and are proposed for discussion — final values are fixed at audit and announced at the official launch. Until then, every figure on this page is a proposal, not a commitment. Conservative trades borrower APR for fewer liquidation events under the same volatility; aggressive trades the opposite way.

Conservative

Base R₀

3%

Slope₁

7%

Kink U*

75%

Slope₂

80%

Reserve φ

30%

LTV

33%

Liq. threshold

45%

Liq. bonus

14%

Origination

2.0%

Grace period

36h

Base (proposed)

Base R₀

4%

Slope₁

8%

Kink U*

80%

Slope₂

60%

Reserve φ

25%

LTV

40%

Liq. threshold

50%

Liq. bonus

12%

Origination

1.5%

Grace period

24h

Aggressive

Base R₀

5%

Slope₁

10%

Kink U*

85%

Slope₂

50%

Reserve φ

20%

LTV

45%

Liq. threshold

55%

Liq. bonus

10%

Origination

1.0%

Grace period

18h

Borrower & lender rate table — proposed base calibration

Utilization $U$	Borrow APR $R_b$	Lender APY $R_l$	Reserve flow
0%	4.00%	0.00%	0.00%
25%	6.50%	1.22%	0.41%
50%	9.00%	3.38%	1.13%
75%	11.50%	6.47%	2.16%
80% (kink)	12.00%	7.20%	2.40%
90%	42.00%	28.35%	9.45%
95%	57.00%	40.61%	13.54%
100%	72.00%	54.00%	18.00%

Above the kink the slope is high for both sides simultaneously: the borrower pays more, the lender earns more, and the reserve fattens. That asymmetry pushes utilization back down into the gentle zone naturally — the curve is a feedback controller around the kink, even though it's static.

Bootstrap Loan rate card

The Bootstrap path uses a flat subsidized borrow APR (not utilization-driven) because the principal is repaid by emissions on a deterministic schedule, not by a volatile market price. The loan term is bounded by the staking lock duration, so a fixed rate is what makes the payoff legible.

Parameter	Conservative	Base	Aggressive
Borrow APR (flat)	8.0%	6.0%	5.0%
Origination fee	2.0%	1.5%	1.0%
Deleverage skim	4.0%	3.0%	2.0%
Bootstrap LTV (max % of staked-position PV)	30%	40%	50%
Reserve factor	30%	25%	20%

The deleverage skim is taken from each routed emission before the rest is applied to debt — see Bootstrap Loan for the cash-flow math.

Sensitivity grid — lender APY by (utilization × reserve factor)

How sensitive is the headline lender APY to the two parameters that actually move it?

U \ φ	15%	20%	25%	30%	35%
50%	3.83%	3.60%	3.38%	3.15%	2.93%
65%	5.69%	5.36%	5.02%	4.69%	4.36%
80%	8.16%	7.68%	7.20%	6.72%	6.24%
90%	32.13%	30.24%	28.35%	26.46%	24.57%
95%	46.04%	43.32%	40.61%	37.91%	35.20%

Reading: at the proposed base $(U, \phi) = (80\%, 25\%)$, lender APY is $7.20\%$. Doubling the reserve factor to $30\%$ costs lenders $0.48$ pp at the kink — a small price for a faster-funded backstop. Above the kink the lender side is so steep that reserve-factor differences are largely cosmetic.

Why these specific numbers (proposal rationale)

• 40% LTV vs. 50% liquidation threshold. The 10pp gap is a price-distance buffer — it sets the size of the move ZAP must make against you before liquidation triggers. With $U^\* = 80\%$ on the borrow side and a 12% bonus on the liquidation side, the gap is consistent with Aave's bluechip-volatile risk tier (e.g. LINK, AAVE), not its stable tier.
• 12% liquidation bonus. The Morpho LIF formula $\mathrm{LIF} = \min\!\bigl(1.15,\; 1/(0.3 \cdot \mathrm{LLTV} + 0.7)\bigr)$ would set the cap at $\approx 17.6\%$ for our LLTV of 50% — we sit conservatively below that, with the headline split 8 pp to liquidator + 4 pp to the reserve. The 8 pp lever is the actual incentive a keeper races for; the 4 pp is the protocol's cut for absorbing tail risk.
• 24h grace period. Modern partial-liquidation models (Aave v4's Target HF, for instance) reduce over-liquidation but don't eliminate single-block oracle noise as a trigger. A 24-hour grace window does — at the cost of allowing a deteriorating position more time before forced unwind. We accept that trade-off because the $s_2 = 60\%$ slope already pre-disincentivizes the high-utilization zone where most cascade events originate.
• 25% reserve factor. Sized so that at modest TVL the reserve grows fast enough to fund modeled bad-debt scenarios within ~12 months while keeping headline lender APY within striking distance of comparable USDC markets (Aave v3 USDC reserve factor is 10%; we are 2.5× that because ZAP is materially more volatile).
• Steep slope above 80%. $s_2 = 60\%$ is gentler than Aave's stable model ($s_2 \approx 75\%$) but firmly in the "panic zone" range. The gentler choice reflects QOM's smaller liquidator depth — pushing rates to absurd heights doesn't help if there isn't enough keeper capital to capture the resulting liquidation flow.

Who pays whom

Flow	Payer	Recipient
Borrow interest	Borrower	Lenders ($1-\phi$) + Protocol reserve ($\phi$)
Origination fee	Borrower	Protocol reserve
Liquidation bonus (12 pp)	Borrower (from collateral)	Liquidator (8 pp) + Protocol reserve (4 pp)
Bootstrap deleverage skim	Borrower (from emissions)	Protocol reserve

Lenders never pay fees. Every revenue line is a borrower-side flow.