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Borrow Fee

A borrow fee
RR
is put in place for each side of each asset. This is the fee paid to the counter-party of your trade to incentivize traders to keep the total position size from diverging significantly with traders total collateral, thus providing further risk mitigation measures for the protocol. Borrow fee is dynamically updated for each asset every interval (1 hour) and calculated as follows:
R=k(AssetsBorrowedTotalAssetsInPool)∗0.01%R=k\left(\dfrac{Assets Borrowed}{Total Assets In Pool}\right)*0.01\%%
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kk
is a parameter that is a function of each asset's historical volatility and is updated regularly as market conditions change.