> ## Documentation Index
> Fetch the complete documentation index at: https://xoxno.com/docs/llms.txt
> Use this file to discover all available pages before exploring further.

# Interest and revenue on Stellar Lending

> How supply APY, borrow APY, and pool utilization work for XOXNO Stellar Lending users.

Interest on XOXNO Stellar Lending is continuous. APY on [XOXNO lending](https://xoxno.com/defi/lending) updates as pool utilization and market settings change.

## Supply earns APY

When you supply an asset, you earn interest on your balance. Earnings compound 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.

## Borrow pays 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 rises when utilization is high. Heavy demand for loans pushes rates up across the curve.

## Utilization in plain terms

Utilization is the share of supplied liquidity that borrowers have taken.

| Utilization | Typical effect                             |
| ----------- | ------------------------------------------ |
| Low         | Cheaper to borrow, lower supply APY        |
| Moderate    | Balanced rates for borrowers and suppliers |
| High        | Costlier borrows, higher supply APY        |

The rate model has breakpoints. Rates climb faster once utilization passes certain levels. The pool also enforces a maximum utilization cap so a large share of liquidity always stays available.

## Protocol revenue

A slice of borrower interest goes to the protocol (the reserve factor). The rest flows to suppliers. You do not interact with revenue directly as a user; it is handled inside the pool.

## Bad debt and suppliers

In rare cases, after severe liquidations, leftover debt may be cleared against the pool. That can slightly reduce returns for suppliers of the affected asset. This is uncommon and only applies when a position cannot be fully recovered.

<Tip>
  **For developers:** Index math, the rate curve, reserve factor split, and bad-debt handling are in [interest and revenue](/stellar-lending/dev/interest-and-revenue).
</Tip>