The kink is a kill, not a target

Why does the supply leg of a spread need a cash line, not just a rate line?

• Because supply rates never change
• Because a full market can pay a high rate and still not let you withdraw
• Because the supply venue's kink is always lower

A borrow venue's curve has slope 1 of 3%, and your supply leg earns 5%. Where can the break-even utilization be?

• Below the kink, because 3% is the starting rate
• Only above the kink, because the rate can't pass 3% below it
• Anywhere, because the break-even doesn't depend on the curve