[MRC-88] Interest Rate Adjustments


The objective of this proposal is to adjust the slope1 interest rate parameter of the following assets as follows:

  • axlUSDC from 12.5 to 20% (applies to Neutron and Osmosis).
  • USDC from 12.5 to 20%.
  • USDT from 12.5 to 20%.
  • axlWETH from 10% to 4%

The proposed stablecoin changes follow the overall interest rate increases for stablecoins across DeFi. These changes will allow for the stablecoin rates within the Red Bank to be less volatile and to better reflect the current conditions of the market.

The proposed axlWETH change to decrease the interest rate comes after it has been observed the market has settled on a rate between 3-4%, and so we will target this rate at 60% utilization rather than 20% to increase efficiency of the market.


We don’t foresee any meaningful risks stemming from this proposal.


This is a signaling proposal, not an executable proposal.

The Mars smart contracts on the Osmosis chain are currently controlled by the Builder Multisig address. If this proposal passes, the builders will utilize their multisig to make the necessary parameter changes.


Copyright and related rights waived via CC0.


This proposal is being made by Mars Protocol Foundation, a Cayman Islands foundation company. Mars Protocol Foundation engages in research and development of the Mars Protocol. Mars Protocol Foundation and certain of its service providers and managers own MARS tokens and have financial interests related to this proposal. The aforementioned persons or their affiliates may also have financial interests in complementary or competing projects or ecosystems, entities or tokens, including Neutron/NTRN, Osmosis/OSMO. These statements are intended to disclose relevant facts and to help identify potential conflicts of interest, and should not be misconstrued as a complete description of all relevant interests or conflicts of interests; nor should they be construed as a recommendation to purchase or acquire any token or security.

This proposal is also subject to and qualified by the Mars Disclaimers/Disclosures. Mars Protocol Foundation may lack access to all relevant facts or may have failed to give appropriate weighting to available facts. Mars Protocol Foundation is not making any representation, warranty or guarantee regarding the accuracy or completeness of the statements herein, and Mars Protocol Foundation shall have no liability in the event of losses or damages ensuing from approval or rejection or other handling of the proposal. Each user and voter should undertake their own research and make their own independent interpretation and analysis of all relevant facts and issues to arrive at their own personal determinations of how to vote on the proposal.

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I think that the ETH interest rate curve should change as well.

Currently there is high demand to borrow ETH at APR’s under the ETH staking rate (3.8%), which we see manifest on Mars via the ETH borrow APR ranging from 3-4%. However this currently occurs at a utilization rate of ~20%, leading to much lower lender APR’s.

The interest rate curve for ETH should adjust, so that 3 to 3.5% borrow APR’s occur around a 60% utilization rate, similar to the staking APY/utilization rate ratios of other staking tokens.

My understanding is that such a change will lead to another 136 ETH being borrowed, and make ETH lender APR be around 1.5%. As far as I can tell, this is better for lenders, and mars holder, while not really increasing protocol risk



  • March 21st, 2023: Mars contributors incorporated the feedback from @valardragon and implemented an IR update for axlWETH.