# Utilization Ratio

Each currency reserve is characterized by its utilization rate
$U$
:
$U \hspace{1mm} = \hspace{1mm} Total Borrowed \hspace{2mm} / \hspace{2mm}Total Liquidity$
$U$
monitors which share of the reserve’s total capital is borrowed.
As
$U$
gets closer to 100%, the capital becomes scarce, meaning there is less liquidity available.
If
$U = 100\%$
occurs it can be a problematic situation for depositors that wish to withdraw their liquidity, but can't until the utilization is decreased. So to prevent this from happening the utilization rate will dynamically adjust so that during periods of high utilization there will be higher returns for depositors, which will decrease the utilization rate.
The interest rate model is calibrated around an optimal utilization rate
$U_{optimal}$
for each supported digital asset used in the protocol that reflects market conditions.
Pixels.so will monitor historical utilization from inception to assess liquidity risk and will look to adjust the Interest Rate Model (IRM) inputs if needed in order to achieve maximum capital efficiency.