In order to earn interest on a position, you must supply it.

Supplying Assets

When you deposit your tokens into the protocol, you receive a derivative representing your underlying deposit.

For example, when you deposit USDC you will receive the corresponding amount of lUSDC. The exchange rate for lUSDC/USDC is perpetually increasing at a rate equal to the supply interest rate of the underlying asset on a per block basis. Interest is accrued each block and changes dynamically with the utilization of the pool.

If USDC suppliers are earning 2% APR on a given block, then the exchange rate for lUSDC/USDC is also increasing at a 2% annual rate for the block. When the user withdraws their tokens from the platform, they are simply exchanging their lUSDC back for USDC.

As a result of the increasing exchange rate, the user will receive more USDC than they initially deposited: the principal plus accrued interest.

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