Interest and revenue

Interest on XOXNO is continuous. Displayed APY on XOXNO updates as pool utilization and market settings change. Rates are variable and not a forecast of future returns.

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Supply and APY

When you supply an asset, your balance may accrue interest. Accrued interest compounds into your supplied amount over time. You do not need to claim rewards manually for base lending interest. Your supply APY depends on:

• How much of the pool is borrowed (utilization)
• The borrow rate for that asset
• The reserve factor (the share of borrower interest kept by the protocol)

More borrowing against the pool generally means higher supply APY for suppliers. That relationship is not guaranteed.

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Borrow and APY

When you borrow, you owe the borrowed amount plus accruing interest. Interest adds to your debt automatically. Repay anytime to reduce what you owe. Your borrow APY may rise when utilization is high. Heavy demand for loans can push rates up across the curve.

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Utilization in plain terms

Utilization is the share of supplied liquidity that borrowers have taken. The rate curve has two breakpoints. Below the first, rates rise gently. Past the second — the “optimal” point — they rise steeply, which is deliberate: it pushes utilization back down by making borrowing expensive and supplying attractive. Each market sets its own breakpoints. On mainnet the optimal point sits between 65% and 85% depending on the asset, with stablecoins highest and thinner markets lowest. There is also a hard ceiling on utilization, between 85% and 95% by market. A borrow or withdrawal that would push past it is rejected outright. That is what keeps some liquidity available for suppliers who want to exit.

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Protocol revenue

A slice of borrower interest goes to the protocol. That slice is the reserve factor, and on mainnet it runs between 15% and 30% of the interest paid, depending on the market. The rest flows to suppliers. You never interact with this directly. It accrues inside the pool and is claimed separately.

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Bad debt and suppliers

Sometimes a position falls so far underwater that liquidating it cannot recover the full debt. What is left over is written off against suppliers. The loss is contained to that one asset’s market. If bad debt appears in the XLM market, XLM suppliers absorb it and nothing else is touched. It shows up as a drop in the supply index, so your balance in that asset falls. There is no insurance fund or backstop that absorbs this first. Suppliers are the first and only layer.