Unlike an exchange or peer-to-peer platform, where a user’s assets are matched and lent to another user, the protocol aggregates the supply of each user; when a user supplies an asset, it becomes a fungible resource. This approach offers significantly more liquidity than direct lending; unless every asset in a market is borrowed, users can withdraw their assets at any time without waiting for a specific loan to mature. Assets supplied to a call are represented by an ERC-20 token balance, which entitles the owner to an increasing quantity of the underlying asset. As the money market accrues interest, which is a function of borrowing demand, Tokens become convertible into a rising amount of the underlying asset. In this way, earning interest is as simple as holding a Token.
Individuals with long-term investments in Ether and tokens (“HODLers”) can use a money market as a source of additional returns on their investment. For example, a user that owns XLUNA can supply their tokens to the protocol and earn interest (denominated in XLUNA) without managing their asset, fulfilling loan requests, or taking speculative risks. dApps, machines, and exchanges with token balances can use the protocol as a source of monetization and incremental returns by “sweeping” harmonies; this has the potential to unlock entirely new business models for the ecosystem.