# INTEREST RATE DYNAMICS

In the **UNBRK™ Protocol**, each **UBKLiquidityPool** structurally functions as a decentralized clearinghouse for **fixed / floating interest rate swaps**.

Lenders receive floating and are economically **long pool utilization and yields**.

Borrowers pay fixed and are economically **short pool utilization and yields**.

<figure><img src="/files/jKQfJwsTnh1lM20h7gSP" alt=""><figcaption></figcaption></figure>

The pool faces lenders and borrowers, novating interest rate payments between the two parties while capturing a fixed spread in the process.

Borrowers make fixed interest payments specific to their loans and recorded interest rates. Lenders earn pro-rata interest, mediated by the size of their share in the pool and the pool utilization.

Both borrowers and lenders remain liquid always:

* Lenders may withdraw their share of the pool at any time (subject only to liquidity).
* Borrowers may repay principal and interest at any time to close and reopen loans.

This structure allows **UNBRK™ Protocol** to create a decentralized interest rate market where borrowers price liquidity risk, and lenders price utilization risk.


---

# Agent Instructions: Querying This Documentation

If you need additional information that is not directly available in this page, you can query the documentation dynamically by asking a question.

Perform an HTTP GET request on the current page URL with the `ask` query parameter:

```
GET https://docs.unbrk.xyz/advanced/interest-rate-dynamics.md?ask=<question>
```

The question should be specific, self-contained, and written in natural language.
The response will contain a direct answer to the question and relevant excerpts and sources from the documentation.

Use this mechanism when the answer is not explicitly present in the current page, you need clarification or additional context, or you want to retrieve related documentation sections.