> For the complete documentation index, see [llms.txt](https://docs.init.capital/llms.txt). Markdown versions of documentation pages are available by appending `.md` to page URLs; this page is available as [Markdown](https://docs.init.capital/lending/lending-apr.md).

# Lending APR

inToken holders receive continuous earnings depending on market conditions based on:

1. Lending pool utilization: Higher utilization means liquidity in the pool is more scarce, which leads to higher APR
2. Borrowing interest: Lenders share the interests paid by the borrowers corresponding to the borrowing rate and the utilization

The lending APR is derived as:

`Lending APR = Utilization Rate * borrow_interest_func(utilization) * (1 - reserve_factor)`

* where the `borrow_interest_func` is the double-slope interest rate model and `reserve_factor` is the protocol fee
* Each asset has its own market supply and demand with its own lending APR that constantly evolves.


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