👓Premium calculations

How exactly is the Premium calculated?

P_min - Minimum Premium (expressed in %) TP_max - Target maximum Premium when the asset is considered risky (expressed in %) UR_risky - Utilization Ratio for pricing model when the asset is considered risky (expressed in %) P_max - Maximum Premium when the utilization ratio equals 100% (expressed in %) UR - Utilization ratio (expressed in %) %P - % Premium in regards to the size of the Policy %P_final - final, % Premium in regards to the size of the Policy

$$UR=\frac {Capacity+Policy\:Size} {Liquidity}$$

$$if\:UR<{UR}_{risky} \implies \%P=\frac{UR}{UR_{risky}}*TP_{max}$$

$$if\:UR>{UR}_{risky} \implies \%P=TP_{max}+\frac{UR-UR_{risky}}{100\%-UR_{risky}}*(P_{max}-TP_{max})$$

$$\%P_{final}=max{\{\%P, P_{min}\}}$$

$$Annualized\:Premium\:Cost = Policy\:Size * \%P_{final}$$

Current protocol constants

P_min = 1.8% TP_max = 10% UR_risky = 85% P_max = 30%