Lending & Withdrawals
What is Lending?
Lending
At Intersect, you can lend your assets, also known as supplying your assets, which is akin to depositing your asset into Intersect.
While Intersect doesn't impose minimum deposit amounts, each asset has a supply cap to manage risk and ensure protocol stability. Users can deposit up to this cap, which is carefully set based on market conditions and liquidity.
Withdrawals
Users can withdraw their assets from Intersect as long as:
The funds are not actively being used as collateral for borrowing.
Withdrawing the assets wouldn't trigger a liquidation on any of your existing loans.
The withdrawal doesn't exceed the available liquidity in the protocol.
Enabling Assets as Collateral
To use your deposited assets as collateral for borrowing, you need to enable them as collateral. This should be enabled by default. Once enabled, your Borrow Limit will automatically adjust based on the amount and type of collateral you've made available.
aTokens: Your Claim on Supplied Assets and Earnings
When you deposit assets into Intersect, you receive aTokens (e.g., aUSDC, aDAI) as a representation of your supplied balance. These aTokens are unique to Intersect and serve as your claim on the deposited assets plus any accrued interest.
The exchange rate between aTokens and the underlying asset appreciates over time as interest is earned. This means the value of your aTokens in relation to the original asset increases, reflecting your earned interest from both loan payments and flash loan fees.
How Much Will I Earn?
As an aToken holder on Intersect, your earnings evolve with market conditions and are derived from two main sources:
1. Interest Rate Payments on Loans
Suppliers share the interest paid by borrowers. Your earnings are based on:
The average borrow rate
The utilization rate of the asset
The higher the utilization of an asset pool, the higher the potential yield for suppliers. This dynamic system ensures that supply and demand in the market directly influence your earnings.
2. Flash Loan Fees
Intersect offers flash loans, a feature that allows users to borrow assets without collateral for the duration of a single transaction. Suppliers receive a share of the flash loan fees, which is a percentage of the flash loan volume. This provides an additional source of income on top of regular interest earnings.
Yield Calculation and Variability
Each asset on Intersect has its own market of supply and demand, resulting in a unique APY (Annual Percentage Yield) that changes over time. To help you evaluate potential earnings:
Current APY is displayed for each asset, showing the current earning rate.
Remember, past performance doesn't guarantee future results. APYs can fluctuate significantly based on market conditions and user activity within the protocol.
Supply and Borrow Caps
Intersect implements supply and borrow caps for each asset:
Supply Caps: Limit the total amount of an asset that can be supplied to the protocol. This helps manage risk and ensure the protocol's stability.
Borrow Caps: Restrict the total amount of an asset that can be borrowed. This protects against excessive borrowing of any single asset.
These caps are carefully set and can be adjusted based on market conditions, liquidity, and risk assessments. Let's learn more about borrowing in the next section.
Remember, while Intersect strives to provide a secure and efficient platform, all DeFi activities carry inherent risks. Always conduct your own research and never invest more than you can afford to lose.
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