Utilization Rate
The share of a lending pool currently borrowed — the dial that sets interest rates and signals liquidity stress.
Utilization rate is the fraction of a lending pool’s deposited assets that borrowers have taken out. At 70% utilization, 70% of supplied funds are lent. Protocols tie interest rates to this figure: low utilization means cheap borrowing and thin supplier yield; high utilization pushes both sharply upward to attract deposits and discourage borrowing.
Near-100% utilization is a warning sign — suppliers may be unable to withdraw because the funds are all lent out, until rates rise enough to rebalance. Watching utilization spikes reveals where leverage demand or liquidity crunches are building, sometimes before they show up in prices.