# Lending Assets

**Lending**

On AlienFi, lending is a process in which users can deposit their tokens into a pool and receive interest on their deposited tokens. This is done by providing liquidity to the pool. The interest earned by lenders comes from other users who are paying interest to borrow tokens.

Users can withdraw their tokens at any time, as long as the tokens are not being used as collateral for an active borrowing position and there are enough tokens in the supply pool. There is no time lock or withdrawal penalty on AlienFi lending.

If there are less tokens in the supply pool than a user is trying to withdraw, they can make a partial withdrawal and they will have to wait until either some borrowers pay back loans or more lenders provide liquidity in order to withdraw the full balance.

**Earning**

After depositing tokens on AlienFi, the lending pool will mint "receipt tokens" and credit those to the user. These receipt tokens serve as proof that the user has supplied assets to the lending network. When the user goes to withdraw their tokens from the supply side, the system will ask for the receipt tokens back, it's important to keep these receipt tokens safe.

The conversion rate from "receipt tokens" to the deposited token takes into account the interest that borrowers pay. This means that when the user withdraws their tokens, they will receive more than they started with, proportional to the token’s APY.

It's important to note that APYs are subject to change and not fixed. The rates are updated on a per-block basis and can fluctuate significantly within relatively short time spans. The rates that lenders receive are determined by the rates that borrowers pay.\
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**Example**

Suppose you deposit 100 $ALIEN in AlienFi Lending Pool with an average APY of 5%, this means that the APY can fluctuate over time, but on average, it will be 5% at the end of the year.

After depositing, you will notice that your wallet now has 100 $ALIEN worth of o$ALIEN tokens, these are the "receipt tokens". These tokens serve as proof of your deposit and you will need them when you withdraw your deposited $ALIEN tokens.

When you withdraw your $ALIEN after an year, you will trade back the o$ALIEN tokens and receive 105 $ALIEN in return (your original 100 $ALIEN plus the 5% APY). This means that you've earned interest on your deposited tokens, which is added to your original deposited amount.\
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**Borrowing**

On AlienFi, users have the ability to borrow various tokens by providing collateral in the form of other tokens. This process is known as over-collateralized lending, where the value of the collateral deposited is higher than the value of the loan being taken. Borrowers must make sure they maintain a proper amount of collateral for the entire lifespan of the loan. This system ensures the safety and security of the platform and its users.

Once collateral is deposited, users can borrow any available token from the lending market, even the same token they deposited as collateral. Additionally, users can earn interest from lending tokens without borrowing.

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**Note:** Any interest you earn from depositing funds helps offset the interest you accumulate by borrowing.
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The amount that a user can borrow is determined by the collateral factor of the token and the amount of collateral deposited. The collateral factor is a percentage multiplier that represents the value of the collateral. For example, if a user deposits $100 worth of token A and token A has a collateral factor of 68%, the user can borrow up to $68 worth of any other token.

It is important to note that users have the freedom to withdraw their collateral and loans at any time, without any penalty or lock-in period. Additionally, the collateral factor is set conservatively and can only be adjusted in one direction, to prevent liquidation.\
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**Interest**

Just like in traditional finance, borrowers are required to pay interest on their loans. This interest goes directly to the lenders/suppliers of that token, minus the Reserve Factor.

The interest that borrowers pay is determined by the APY listed for the token(s) they are borrowing. It is important to note that APYs in Alien Lending Network are floating and not fixed. Rates get updated on a per-block basis and can fluctuate significantly within relatively short time spans.

The interest that accrues each block is added to a user’s borrow position, meaning their borrow position slowly grows over time in proportion to the APY.

To pay back this accrued interest, a user simply pays back a portion of their loan.\
