> For the complete documentation index, see [llms.txt](https://docs.echelon.market/echelon/llms.txt). Markdown versions of documentation pages are available by appending `.md` to page URLs; this page is available as [Markdown](https://docs.echelon.market/echelon/core/interest-rates/supply-rates.md). # Supply Rates #### **Supply Rates on Echelon** Echelon’s supply rate is derived from borrower interest payments, ensuring that lenders earn a proportional share of the yield generated from borrowing activity. A portion of this yield is allocated to the protocol’s liquidity reserves through the **Reserve Factor**, while the remainder is distributed to suppliers. This mechanism sustains protocol liquidity while incentivizing lenders to contribute assets. *** #### **How Supply Rates Are Determined** The **Supply Annual Percentage Yield (APY)** is influenced by several key factors: 1. **Utilization Ratio** – The proportion of supplied assets that are actively lent out. * **Higher utilization** increases supply rates, as more interest is paid by borrowers. * **Lower utilization** results in lower supply rates due to reduced borrower demand. 2. **Variable Interest Rate** – The dynamic interest rate applied to loans, which adjusts based on market conditions and asset utilization. 3. **Reserve Factor** – A percentage of borrower interest that is redirected to the **protocol’s liquidity reserve**, reducing the total yield distributed to suppliers. Additionally, supply rates may be **subsidized by token incentives**, which vary on a **pool-by-pool basis** to enhance lender returns. *** #### **Viewing Supply Rates** The most up-to-date **Supply APY** for each asset is displayed on the **Core Markets interface**. Users can check live rates and pool-specific incentives to optimize their lending strategy. --- # Agent Instructions This documentation is published with GitBook. GitBook is the documentation platform designed so that both humans and AI agents can read, navigate, and reason over technical content effectively. Learn more at gitbook.com. ## Querying This Documentation If you need additional information that is not directly available in this page, you can query the documentation dynamically by asking a question. Perform an HTTP GET request on the current page URL with the `ask` query parameter, and the optional `goal` query parameter: ``` GET https://docs.echelon.market/echelon/core/interest-rates/supply-rates.md?ask=&goal= ``` `ask` is the immediate question: it should be specific, self-contained, and written in natural language. `goal` is optional and describes the broader end goal you are ultimately trying to accomplish on behalf of the user. GitBook uses it to tailor the answer towards what is most useful for that goal. The response will contain a direct answer to the question and relevant excerpts and sources from the documentation. Use this mechanism when the answer is not explicitly present in the current page, you need clarification or additional context, or you want to retrieve related documentation sections.