Interest Mechanics

Adaptive Interest-Rate Engine

1. Core supply-demand curve Helios begins with the well-tested “kinked” model popularized by Aave and Compound. Borrow rates rise as pool utilization climbs, and the corresponding supply APY is the weighted average of those borrow payments. For example, at 50 % utilization, for example, the engine may quote 4 % borrowing / 2 % supplying; at 90 % utilization the same curve steepens to 15 % borrowing / 10 % supplying.

2. Autonomous risk premium—no manual switches Rate adjustments are fully algorithmic. A statistical risk engine ingests real-time feeds on data including but not limited to:

• Mempool congestion (fee pressure, transaction delay)

• BTC price volatility (1-h / 24-h σ)

• Liquidity depth on major spot and derivatives venues

The model adds or subtracts a spread to the base curve every block. Humans cannot override the output directly but via governance that tunes model caps and floor parameters.

3. Example Scenario snapshots

Utilization	Network state	Borrow APR	Supply APY	Adjustment driver
30 %	Normal mempool, low vol	3 %	1.5 %	Base curve
75 %	Busy mempool, medium vol	9 %	6 %	Base + 150 bp congestion spread
92 %	Congested mempool, high vol	18 %	12 %	Base + 300 bp congestion & volatility spread

4. “Juicing” depositor APY Three levers raise real-world yield without distorting risk:

• Protocol-fee cashback – Up to 50 % of liquidation and flash-loan income is rebated to suppliers, boosting effective APY by 50–150 bp.

• HELIOS emission incentives – Governance can direct token rewards to specific pools; during bootstrap this can add another 3–5 % nominal APR.

• hBTC yield token staking – Suppliers who opt to receive interest in hBTC (the protocol’s aToken analog that accrues yield in BTC) earn an additional auto-compounding component sourced from internal collateral swaps.

Combined, a 10 % on-chain supply rate in a high-utilization environment can translate to 13–15 % headline APY once fee-sharing and token incentives are layered in—while preserving the underlying risk profile enforced by the adaptive engine.

In short, Helios sets rates algorithmically, anchors risk premiums to objective on-chain conditions, and offers transparent, governance-approved pathways to enhance depositor returns.