# Yielding Structure

<figure><img src="/files/S6m0XYKuZwD5WcFhWasl" alt=""><figcaption></figcaption></figure>

## How's lending works

* Rho Markets offers a money market system that operates on an over-collateralization model, providing users with a simplified and structured process to supply assets, secure loans, and earn rewards in the form of RATE tokens.
* When users contribute liquidity to Rho Markets, they are awarded LP Tokens. These tokens represent the users' stake in the loan pool and their value increases gradually over time due to the accumulation of interest. This means that the longer users keep their assets in the loan pool, the more their LP Tokens appreciate in value.
* When users decide to settle their loans, they can exchange their LP Tokens for their original deposit, which has now grown in value. This incentivizes users to actively participate in the market and contribute liquidity, as they can benefit from the appreciation of their assets.
* To initiate a loan, borrowers will automatic activate the 'collateral switch' feature. This allows borrowers to use their deposited assets as collateral, enabling them to borrow funds in proportion to the value of their assets. For example, if a user deposits ETH and activates the collateral switch, their ETH is converted into rETH, which represents the borrowing power they have within the market
* The over-collateralization model ensures that borrowers' loans are secured by assets of equal or greater value. This mitigates the risk of default and provides stability to the lending process. Additionally, it protects lenders' funds by ensuring that borrowers have sufficient collateral to cover their loans.

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### Real Yield Layer

* RATE / ETH Pair will be in DEX and we incentive people who add liquidity and do swaps, all trading fees will return back to LP, and people who add liquidity can mining out more $RATE
* We support LRT Asset like pufETH / ezETH and so on, stake or supply LRT Assets in Rho Markets can have multi-layers of yields from EigenLayer and other LRT protocols
* Scroll Points + Rho Points will be added with all operations including supply / borrow


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