Utilization Rate (Lending)
The percentage of a lending pool’s deposited assets that are currently borrowed.
What is Utilization Rate (Lending)?
Utilization rate measures the proportion of a lending pool’s supplied assets that borrowers have taken out, directly influencing interest rates. For example, a 70% utilization rate means $700 of a $1,000 pool is borrowed. High utilization (e.g., 90%) increases borrow rates and supplier yields, while low rates signal excess liquidity. Aave’s USDC pool reported an average 65% utilization rate in Q2 2025, per DefiLlama.
This metric helps protocols balance supply and demand. Optimal utilization (typically 70–80%) ensures liquidity without discouraging borrowers. In 2024, high utilization during market rallies pushed borrow rates to 15% on some Compound pools, reflecting dynamic rate algorithms.
Related Terms
Slippage (DEX)
Slippage on a decentralized exchange (DEX) is the difference between the expected price of a token trade and the actual executed price, caused by market volatility or insufficient liquidity in a pool.
Weak Hands
Investors or traders who sell their digital assets quickly during market downturns or price declines, often at a loss, due to low patience or risk tolerance.
Trustlessness
A system property allowing transactions to occur without relying on trust in any single party or intermediary.
Tether
The company issuing USDT, a leading USD-pegged stablecoin, focused on blockchain-based financial solutions.
UTXO (Unspent Transaction Output)
UTXO (Unspent Transaction Output), a record of unspent Bitcoin used for on-chain analysis to track fund flows, ownership patterns, and network activity.
Web Content Monetization
Generating revenue from digital content using standardized payment protocols.