The chart visualises the algorithmic relationship between supply and demand. The sharp rise (kink) typically occurs at 80-90% utilisation to protect liquidity.
The utilisation rate acts as the central nervous system of a lending protocol. Currently, USDC on Compound V3 registers at 76.78%.
For a DeFi lending protocol, Capital Efficiency is defined by how effectively the TVL is deployed. With a TVL of $$621,650, the protocol has $477,303 in active loans. Metrics indicate a healthy lending market. The debtors are active enough to generate fees, but enough reserves remain to ensure lender confidence.
Market Implications: Conditions are favourable for debtors. With ample assets available, interest rates are likely stabilised at the lower slope of the interest rate curve.
Projecting pool stability under hypothetical high-demand scenarios.
| Scenario | Remaining Liquidity | Risk Level |
|---|---|---|
| Current State | $144,347 | Optimal |
| At 90% Utilisation | $62,165 | Critical |
| At 95% Utilisation | $31,082 | Insolvent Risk |
Utilisation Rate: The percentage of the pool's total capital currently lent out to borrowers. It is the primary driver of interest rates in DeFi.
The Kink: A specific point in the interest rate curve (usually 80-90%) where borrowing costs jump exponentially to discourage depleting the pool entirely.
Safety Buffer: The remaining 23.2% of liquidity ensures lenders can withdraw their assets without waiting for borrowers to repay loans.
The Utilisation Rate is the single most important metric in DeFi lending. It balances the ecosystem. If utilisation is too low (e.g., 10%), there is too much idle capital earning no interest, leading to low APY for lenders. If utilisation is too high (e.g., 99%), there is a "liquidity crunch," meaning lenders cannot withdraw their funds until borrowers repay loans.
Protocols use an algorithmic "Interest Rate Model" to manage this. As utilisation rises, the borrowing interest rate rises to encourage repayments. Most protocols aim for an "Optimal Utilisation" rate (usually around 80%), where capital efficiency is maximised without risking a liquidity crisis.
Data Sources: Metrics derived from hourly snapshots via the DeFiStar Indexer. Active Tracking: 04 Dec 2025, 10:05 UTC.
Disclaimer: Data is for informational purposes only. Past performance is not indicative of future results. Terms of Service apply.