Contrary to most lending protocols, which typically have dynamic borrowing and lending interest models, depending on the utilization of the lending pools, the Defrost V2 simplifies the lending interest to a constant rate for borrowers.
First, there is no interest margin in Defrost V2. In other words, the borrowing interest and lending interest will be the same and the protocol will not have a cut in the difference.
Second, the interest rate is constant, no matter the utilization of the lending pools. For example, if a user is longing AVAX against USDC, it means he/she is borrowing USDC from the lending pools. In Defrost V2, the cost of borrowing will be set at a constant state. There will be no chance of an increase in the interest cost, even if a growing number of traders long AVAX and borrow more USDC from the lending pool. In other words, no surprises in the interest cost.
Third, the contributors in the lending pools will share the interest accrued pro rata. In other words, lenders are receiving interest proportionate to their deposits according to the time of contribution.