Native Yield

In Pac Finance, liquidity providers (LPs) can earn returns in two main ways, which together form the core incentive mechanism of our lending protocol.

1. Supply Annual Percentage Yield (Supply APY):

   • Dynamic Interest Rate Model: The Supply APY is dynamically calculated based on the average loan interest rate, which reflects the market's supply and demand. An algorithmic model is employed to adjust rates in real time, ensuring effective distribution of liquidity.

   • Utilization Rate Weighting: The APY is calculated based on the reserve utilization rate (the ratio of borrowed amount to total reserves). A higher utilization rate signifies increased demand for liquidity, leading to higher returns for liquidity providers.

   • Risk Adjustment: The level of utilization rate also serves as an indicator of risk. Our protocol employs a utilization rate threshold to balance returns and risk, ensuring system stability.

2. Native Yield:

   • Blast's Innovative Mechanism: Our native yield is based on the innovative concept introduced by Blast, allowing users to earn additional returns without sacrificing liquidity.

   • Value Growth Over Time: Unlike traditional lending protocols, our model encourages long-term investment. As time progresses, your native yield as a liquidity provider will gradually increase, significantly enhancing your total returns in comparison to other protocols.