Utilization rate

In a DeFi lending pool, the utilization rate equals total borrows divided by total supplied assets. If depositors have supplied 100 million USDC and borrowers have taken 80 million, utilization is 80%. Protocols feed this number into an interest rate model, so borrowing gets more expensive and lending more rewarding as utilization climbs.

Utilization is one of the first metrics analysts check on Aave, Compound or Morpho dashboards. A steadily high figure signals strong demand for leverage or for a specific asset, often during bull markets or points campaigns, while very low utilization means deposits are sitting idle and earning little.

When utilization approaches 100%, there is almost no cash left in the pool, and lenders who want to withdraw must wait until borrowers repay or are liquidated. That is why rate curves jump sharply above a target level. Utilization also ignores collateral quality, so a healthy-looking figure says nothing about whether the loans themselves are safe.