# What is the elastic interest rate ? Elastic interest rate means that interest payed by borrowers on [Kashi](https://hackmd.io/@HHK-ETH/HJzfR9vzt) don't increase instantly when utilization goes up. By using elastic interest rate we try to optimize utilization, the target is between 70% and 80%. When above 80% the interest rate will rise up to 1000% APR, bellow 70% it will start to drop with a minimum of 0.25% APR. The APR evolution is determined by utilization and time, closer it is to 70%-80% and less it will change and the further is is higher is the evolution up to halves every 8 hours if 0% utilization and double every 8 hours if 100%. Here is a chart explaining the interest change : ![](https://i.imgur.com/k5GUbhC.png)