🍎Depositing

By depositing your favored listed assets, you will be able to receive lTokens (liquidity Tokens) and earn lending fee income. lToken is a deposit certificate of an underlying asset that accrues interests from being borrowed on Palmy Finance. lToken is redeemable at any time at a 1-to-1 rate with the underlying asset on Palmy Finance as long as there is liquidity available.

Rewards for Depositors

Reward 1: The Interest Rate on Loans

An interest rate paid by a borrower of an asset is distributed to depositors.

The interest rate of an asset is calculated by the utilization rate U.

$U \hspace{1mm} = \hspace{1mm} Total Borrows \hspace{2mm} / \hspace{2mm}Total Liquidity$

As U gets closer to 100%, depositors run the risk of not being able to withdraw their assets, which leads to a higher interest rate. For instance, when an asset is scarce, it requires high-interest rates for repayments of loans and additional deposits.

Reward 2: Flash Loan Fees

Palmy Finance returns 0.09% of the volume used in Flash Loan to depositors.

Flash Loan is an advanced feature for developers. There is no specific page for this feature for a user on Palmy Finance. It allows developers to borrow an asset without collateral, as long as the borrowed amount and a fee are returned before the end of the transaction. There is no real-world analogy to Flash Loan. Understanding this requires some basic knowledge about state management in blockchains.