Borrowers Interest Rate

1. Borrower’s Siphoning Rate (r_C)

This is the gross rate paid by the borrower to CLPs, calculated as:

r_C = (CLP · IR(u)) / C

Where:

• C = borrower’s total collateral

Borrowers also continue to earn any passive yield from the base protocol on their collateral, minus this siphoning rate (where applicable).

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2. Net Rate Paid by Borrower (r_net_C)

This adjusts the gross rate to account for the borrower’s active debt:

r_net_C = r_C / (1 − λ_twyne)

Where:

• λ_twyne = borrower’s Loan-to-Value on Twyne

• B = borrower’s outstanding borrow

• C − B = borrower’s equity in the position

This formula ensures borrowers pay proportionally more as their position gets riskier — aligning incentives between CLPs and borrowers.