# 3.2 Interest Rate Mechanics

Inverted token markets are defined by an interest rate, which is applied to all borrowers uniformly, that adjusts over time as the relationship between supply and demand changes. The history of each interest rate, for each token market, is captured by an Interest Rate Index, which is calculated each time an interest rate changes, as a result of a user minting, redeeming, borrowing, repaying or liquidate the asset.
