NX Academy
  • Academy Overview
  • NX 101
    • Module 1｜Introduction to NX
    • Module 2.1｜Leverage Basics
    • Module 2.2｜Liquidation Basics
    • Module 2.3｜Liquidation In NX
  • Fulcrum 101
    • Module 3.1｜What is Fulcrum Strategy
    • Module 3.2｜How Does Fulcrum Strategy Work
    • Module 3.3｜Deposit to Earn
    • Module 3.4｜Leverage to Earn
      • Module 3.4.1 | JLP Hedge
    • Module 3.5｜JLP 101
    • Fulcrum Summary
  • GMS 101
    • Module 4.1｜What is Airdrop
      • Module 4.1.1｜What is AirdropFi
    • Module 4.2｜What is GMS Strategy
    • Module 4.3｜How GMS Strategy Works
    • Module 4.4｜Integrated Protocols
      • Module 4.4.1｜Solayer
      • Module 4.4.2｜SolanaHub
      • Module 4.4.3｜The Vault
    • GMS Summary
  • NX Staking
    • Module 5.1｜Introduction of NX Staking
    • Module 5.2｜Your sNX automatically increases over time!
    • Module 5.3｜Unstake NX
    • Module 5.4｜Reward Breakdown
    • Staking Summary
  • NX Vault
    • Module 6.1｜Introduction of Vault
    • Module 6.2｜What is JLP Delta Neutral Strategy
    • Module6.3｜How does JLP Delta Neutral Strategy work
    • Module 6.4｜Why did we choose to Build on Drift
    • Vault Summary
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  • How to Earn as a Lender?
  • FAQ
  1. Fulcrum 101

Module 3.3｜Deposit to Earn

PreviousModule 3.2｜How Does Fulcrum Strategy WorkNextModule 3.4｜Leverage to Earn

Last updated 2 months ago

In the Fulcrum Strategy, lenders can earn passive income by depositing USDC/USDT or SOL into the lending pool. This process allows users to enjoy an auto-compounded lending APR, maximizing their returns without needing to actively manage their investments.

How to Earn as a Lender?

1

Deposit Funds: Start by depositing your USDC/USDT or into the lending pool on the NX Finance platform.

2

Earn Interest: As a lender, you will earn interest on your deposited funds based on the current lending APR.

3

Auto-Compounding: The interest earned is automatically compounded, meaning it is reinvested into your principal amount, allowing you to earn interest on your interest over time.

4

Monitor Your Earnings: You can track your earnings and see how your investment grows through the platform’s dashboard.

FAQ

Where is the source of my interest?

The interest you earn as a lender comes from borrowers who take out loans from the lending pool. When borrowers pay interest on their borrowed funds, that interest is distributed among lenders based on their share of the total deposits in the pool.

Is the lending pool auto-compound?

YES! The lending pool automatically compounds your earned interest. This means that the interest you accumulate is added to your principal balance, allowing you to earn interest on both your initial deposit and any previously earned interest.

What is the highest APR I can earn?

The highest APR you can earn for USDC and USDT is 45%, while for SOL, it is 15%. This maximum rate is influenced by market conditions and the utilization rate of the lending pool.

Why does the lending APR always change?The lending APR fluctuates primarily due to the Utilization Rate of the lending pool:

  • 0-80% Utilization Rate: Interest rates grow linearly from 10% to 25%.

  • 80-100% Utilization Rate: Interest rates experience a linear increase from 25% to 45%.

This means that as more funds are borrowed from the pool, lenders may receive a higher APR as compensation for providing liquidity.

What are the risks of being a lender?

When participating as a lender, consider the following risks:

  • Withdrawal Limitations: Withdrawal of tokens might be restricted if not enough tokens are available in the vaults due to lending activities (e.g., when utilization rate reaches 100%). In such cases, lenders may need to wait until leveragers close their positions or new funds come in before they can withdraw their assets.

By understanding these aspects of earning as a lender in Fulcrum, you can make informed decisions and maximize your returns in the NX Finance ecosystem while being aware of potential risks involved.

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