Variable-rate lending on Fira works like most DeFi money markets: you deposit capital, it earns yield based on market conditions, and you can withdraw whenever you want. No maturity, no lock-in.
How it works
When you deposit into a variable-rate market, your funds join a lending pool. Borrowers pull from that pool and pay interest on what they use. The rate you earn adjusts continuously based on utilization — the fraction of the total supplied capital that's currently borrowed.
The more of the pool that's borrowed, the higher the rate — for both borrowers and lenders. If utilization drops (more capital, fewer borrowers), rates come down.
Your lending yield at any moment:
Lending rate = Borrowing rate × Utilization
Since utilization is always less than 100%, your lending rate is always slightly below the borrowing rate. That spread accounts for the portion of capital sitting idle in the pool.
Worked example
You deposit 1,000 USDC into a variable-rate market. The current rate is 4.5% APY.
Over the next 3 months, the rate fluctuates — averaging out to 4.2% APY over that period.
Detail | Value |
Capital deposited | 1,000 USDC |
Average rate (3 months) | 4.2% APY |
Earned after 3 months | ~10.5 USDC |
Balance at withdrawal | ~1,010.5 USDC |
You didn't lock anything in. You could have withdrawn at any point — after a day, after a week, or after 3 months.
Key differences from fixed-rate
Fixed-rate | Variable-rate | |
Rate at entry | Locked | Unknown |
Rate changes | Never (if held to maturity) | Continuously |
Maturity | Yes | None |
Exit | Via AMM (market price) | Withdraw anytime |
When variable-rate makes sense
You want the flexibility to withdraw on short notice.
You believe interest rates will rise (you'd benefit from higher utilization).
You don't have a specific time horizon in mind.
You're not comfortable committing to a maturity date.
See also: How fixed-rate lending works → | Lending overview →