# Lending Calculation

When supplying or borrowing assets, users change the utilization ratio of the pool leading to a change in interest rates. The major consequence is that all loans have a variable rate that will change dynamically during the life of the loan. 

### **Interest Rate Calculations**

Interest rates are calculated continuously and interest are compounded based on the current parameters of the protocol. 

### **Fees**

* Reserve Factor allocates a portion of the borrow interest to the protocol, while the remaining portion is distributed to the lenders. 
* Loan Origination Fee is charged when funds are borrowed.  
* Liquidation Fee is charged when a liquidation occurs.

The specific Reserve Factor, Loan Origination Fee and Liquidation Fee will be set by the protocol’s decentralized governance and adjusted over time.