# Interest Rate Model

Notional uses a two kink interest rate model to determine the pre-fee borrow rate. The pre-fee borrow rate is the interest rate that borrowers have to pay before fees are applied.

Notional's governance sets the following parameters to determine the shape of the interest rate curve:

* Kink1 Interest Rate 
* Kink2 Interest Rate
* Max Interest Rate 
* Kink1 Utilization Rate
* Kink2 Utilization Rate

<figure><img src="/files/veGnp2bZD0znww4ymIFk" alt=""><figcaption></figcaption></figure>

The pre-fee borrow rate is a function of the prime money market utilization. A market's utilization is defined as the total amount of funds borrowed divided by the total amount of funds supplied.

The interest paid by the borrowers according to the pre-fee borrow rate is amortized over the total funds supplied.


---

# 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.notional.finance/notional-v3/prime-money-market/interest-rate-model.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.