Morpho’s supply formula

A Morpho market has a 9% borrow APY, 70% utilization and a 5% fee. What is the supply APY?

• 9% × 0.95 = 8.55%
• 9% × 0.70 × 0.95 = 5.99%
• 9% × 0.70 = 6.3%, because the fee is paid by borrowers

You add a large deposit to a market and nobody borrows more. Which way does utilization move, and what happens to the borrow rate?

• Utilization rises, so the borrow rate rises
• Utilization falls, so the market moves down its rate curve and the borrow rate falls
• Utilization is unchanged, because deposits and borrows are counted separately