DeFi Borrowing Rate Alerts: When Your Loan Gets Expensive

DeFi borrowing rates are variable. A loan that cost 3% APY yesterday can cost 15% today. Without monitoring, you might be paying more than you realize.

Variable Rates in DeFi Lending

Protocols like AAVE, Morpho, and Euler use algorithmic interest rates. Rates adjust based on utilization: when more people borrow from a pool, rates increase.

This means your borrowing cost can change significantly between the time you open a position and today.

Net APY: The Number That Matters

If you supply collateral and borrow against it, your net APY is:

Net APY = Supply APY - Borrow APY

A positive net APY means you earn more than you pay. A negative net APY means your position costs you money over time.

When Rates Spike

Rate spikes happen during periods of high demand. Common triggers include:

• Market volatility driving leveraged trading
• Yield farming opportunities creating borrow demand
• Large withdrawals reducing available liquidity

A rate that was sustainable can become expensive quickly.

What to Monitor

For borrowing positions, key alerts include:

• Borrowing rate increase: Your borrow APY crosses a threshold
• Net APY turns negative: Your position starts costing money
• Supply rate drops: Your collateral earns less than expected

Rate Alerts with Otomato

Otomato monitors your lending positions and alerts you when rates change meaningfully. You receive a notification when your borrowing rate spikes or your net APY degrades, so you can decide whether to keep the position or close it.