Define: Elastic Interest Rate
An elastic interest rate is a means of incentivizing liquidity to hover within an ideal range (70 - 80%). The elastic interest rate optimizes for utilization (borrowed assets / total assets). If the utilization is below the minimum target utilization, the interest rate halves every 8 hours. It is capped at a minimum utilization. If the utilization goes above the maximum target utilization, the interest rate doubles every eight hours. At 100%, utilization it doubles every 8 hours. At 90% it's much slower, and at 80% it's stable. Below 70%, it starts dropping, and at 0% it drops by halving every 8 hours. That is, the elastic interest rate is not linear. Rather, the closer utilization gets to the extremes, the faster it goes.