The utilisation rate tells you how much of the money in a DeFiDeFi (decentralised finance)Financial services, such as lending, saving and trading, that run on smart contracts on a blockchain instead of through a bank or other middleman. lending pool is lent out. It is calculated as borrowed funds divided by supplied funds. If US$100 million has been deposited and US$80 million is lent out, the utilisation rate is 80%.
Why do rates rise?
The utilisation rate drives interest rates on lending services such as Aave. When it is low, a lot of money sits idle and rates are low. As it rises, the borrow APRBorrow APRThe interest you pay on a loan from a DeFi lending service. It is usually variable and depends on supply and demand. rises too, and on Aave it rises much faster once a set level is passed.
Higher rates have two effects. Borrowers get a reason to repay, and new money is drawn in by a higher supply APYSupply APYThe return you earn for depositing crypto in a DeFi lending service. It comes from the interest borrowers pay and it varies.. Both bring the utilisation rate back down.
Why can a withdrawal be delayed?
You can only withdraw money that isn't lent out. In the example above, US$20 million is available. If many people want to withdraw at once and the utilisation rate approaches 100%, you may have to wait until borrowers repay or new money comes in.
This is a bit like a bank. A bank lends out much of its deposits and doesn't have all the money on hand if everyone wants it back at once. The difference is that in DeFi the utilisation rate is visible on the blockchain at any time, and the pool's LiquidityLiquidityHow easily an asset can be bought or sold quickly at a fair price, without the trade moving the price much. depends directly on it.
Everything in Myntkaup Learn is written and regularly reviewed by the Myntkaup editorial team. It is for education and is not investment advice. Editorial policy. Updated 18 October 2026.