# What is lending ?

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<summary>How Lending Works ? 🛠️</summary>

1. **Deposit Assets :** Choose an asset (e.g., USDT, WBTC) and supply it to the pool.
2. **Earn Yield :** Your earnings depend on the pool’s utilization rate, higher utilization means\
   higher yields for lenders.
3. **Flexibility :** Withdraw your assets at any time, as long as sufficient liquidity is available\
   in the pool.

**Example :** If you supply 1,000 USDT to the pool, you start earning interest immediately as borrowers use the funds. The interest is distributed proportionally based on the amount of your supply. More details on [**How to Connect and Supply**](https://colend.featurebase.app/help/articles/5071385-connect-and-supply)

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### Key Benefits of Lending 📈 <a href="#dsyoll1boc1" id="dsyoll1boc1"></a>

* **Passive Income :** Generate consistent earnings without actively managing your funds.
* **Ownership :** Keep control over your assets while benefiting from potential price appreciation.
* **Dynamic Rewards :** Earn more when pool utilization increases, reflecting higher demand\
  for borrowing.

### How You Earn on Colend 💎 <a href="#wfp7w2w8tr2" id="wfp7w2w8tr2"></a>

Your earnings on supplied assets come from two main sources :

* **Interest from Borrowers :** You earn a share of the interest paid by borrowers.
* **Flash Loan Fees :** You earn a share of the fees generated from Flash Loans.

These fees are calculated based on the loan amount and are distributed to asset suppliers.

**Note :** The APY (Annual Percentage Yield) for each asset varies based on market conditions\
and is viewable in real-time on [**Colend’s App**](https://app.colend.xyz/markets/).

### Supply Limits and Considerations ✅ <a href="#cyekpm61o6l" id="cyekpm61o6l"></a>

* **No Minimum Supply** : There is no minimum amount required to start supplying,\
  making it accessible for everyone.
* **Transaction Costs** : For very small supplies, be aware that transaction costs might outweigh the earnings.
* **Supply Caps :** For some types of assets, there may be a maximum limit on how much can\
  be supplied to the pool. These limits, known as supply caps, are set by community governance to certify the pool stays balanced and secure for all users.
