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Miner Rate Model

The Parasail protocol uses a Jump Rate model to determine miner rates, which is designed to optimize capital efficiency while maintaining protocol stability. This model adjusts miner rates based on the utilization rate of the pool.

Overview​

The Jump Rate model consists of three key rate points:

  • Minimum Rate: 12% (at 0% utilization)
  • Jump Rate: 17% (at 90% utilization)
  • Maximum Rate: 35% (at 100% utilization)
Interest Rate Model

How It Works​

  1. Base Rate (0-90% Utilization)

    • Starting at 12% when the pool is empty
    • Increases linearly as utilization increases
    • Reaches 17% at 90% utilization
    • Encourages early participation and stable growth

  2. Jump Point (90% Utilization)

    • A significant increase in rates occurs at 90% utilization
    • Helps prevent the pool from reaching maximum capacity
    • Signals to users that the pool is approaching full utilization

  3. Maximum Rate (90-100% Utilization)

    • Rates increase sharply from 17% to 35%
    • Provides strong incentives for users to:
      • Deposit additional funds to earn higher rewards
      • Pay back early to avoid high miner rates
      • Maintain sufficient liquidity for withdrawals

Benefits​

  1. Capital Efficiency

    • Lower rates during normal utilization encourage requests for delegation
    • Higher rates at high utilization prevent over-utilization
    • Optimal balance between delegation and mining

  2. Protocol Stability

    • Prevents the pool from reaching 100% utilization
    • Maintains sufficient liquidity for withdrawals
    • Reduces the risk of liquidity crises

  3. User Incentives

    • Clear signals for optimal deposit/withdrawal timing
    • Predictable rate changes based on pool utilization
    • Fair distribution of rewards across all participants

Example Scenarios​

  1. Low Utilization (30%)

    • Miner rate ≈ 13.67%
    • Encourages requests for delegation and pool growth
    • Competitive miner rate for miners

  2. Medium Utilization (70%)

    • Miner rate ≈ 15.89%
    • Balanced requests for delegation and delegating
    • Moderate rewards and miner rates for all participants

  3. High Utilization (95%)

    • Miner rate ≈ 26%
    • Strong incentives for deposits
    • High rewards for delegators

Impact on Users​

  1. Delegators

    • Higher rewards during periods of high utilization
    • Stable rewards during normal market conditions
    • Clear signals for optimal deposit timing

  2. Miners

    • Lower rates during normal utilization
    • Higher costs during peak demand
    • Incentives to maintain healthy utilization levels

  3. Liquidity Providers

    • Enhanced rewards during high utilization
    • Protection against extreme market conditions
    • Better risk management through rate adjustments