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Lenders supply assets to the protocol which are then lent out to borrowers as undercollateralized debt. The value proposition for Lenders is straightforward - supply assets to the protocol with the expectation to earn yields higher than those in current credit markets.

Lenders interact with the protocol by supplying assets and receiving corresponding interest-bearing LTokens in return. These LTokens act as a receipt of deposit and can be burned at a later point in time to redeem the initial principal and accrued interest.