Lending
Lending and borrowing on LayerBank use over-collateralized money markets with variable rates and on-chain accounting.
How LayerBank Lending Works
LayerBank lending markets connect suppliers who provide liquidity with borrowers who use eligible supplied assets as collateral. Suppliers can earn variable interest, while borrowers pay a variable borrow rate based on market utilization.
- Supply: deposit a supported asset into a lending market.
- Borrow: enable eligible collateral and borrow within the market's risk limits.
- Repay and withdraw: repay debt plus accrued interest before withdrawing collateral that is supporting the position.
lTokens and Position Accounting
LayerBank's lending architecture uses interest-bearing position tokens on supported deployments. These tokens represent a user's share of the pool and account for interest accrued while liquidity remains supplied.
Borrowing Against Collateral
Borrowing capacity is determined by the value of supplied collateral and the applicable loan-to-value parameters. As asset prices and debt change, the safety of the position changes as well.
Review Collateral & Liquidation before borrowing. A position that exceeds its permitted risk threshold can become eligible for liquidation.
Dynamic Interest Rates
Supply APR and Borrow APR are not fixed. They respond to utilization so that borrowing becomes more expensive when liquidity is scarce and supplier returns can rise as demand for liquidity increases.
See Interests for the utilization model and APR for rate components.
Frequently Asked Questions
How do I earn with LayerBank lending?
Supply a supported asset to an active market. The displayed supply APR is variable and can change as utilization changes.
Can I borrow against supplied assets?
Eligible supplied assets can be enabled as collateral subject to LTV, liquidity and market-specific risk parameters.
Can a LayerBank position be liquidated?
Yes. Borrowed positions can be liquidated if collateral value and debt move beyond the market's permitted risk threshold.
Reviewed for layerbank.trade on November 2, 2026.