Interest Rates are diffrent for each token and are determined dynamically. Borrow rates depend on the utilization rate of the market which is the ratio of currently borrowed assets to total available assets for borrowing. Being a P2P protocol, each borrowed token must have been supplied by a lender which could result in all tokens currently being borrowed and lenders being unable to withdraw their supplied tokens at the moment. To address this setback, markets have an optimal utilization rate that is targeted for each market, which is usually about 80%.
To drive the market towards the target utilization rate, borrow rates are lower when the utilization rate is less than the target rate to incentivize borrowers to take out loans and provide more attractive returns for lenders. If the current utilization rate is above the target rate, borrow rates drastically increase to disincentive taking out new loans (or incentivize repaying loans) such that there will be sufficient liquidity for some lenders to withdraw their tokens again.
The interest model consists of two linear functions merged at the optimal utilization rate. The slopes, optimal utilization rate, and base rate parameters can be configured for each market.
Proton Loan provides Variable Loans, a type of loan where the borrowing rate depends on the current utilization rate and therefore fluctuates over time. Note that all borrowers of the same market also pay the same borrow rates on all of their loans.
Variable Borrow Interest Rate Parameters