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How does Aave interest rates payout work?
I am trying to understand how Aave interest rates system is paid out. Suppose I lend my USDC to the pool which is then borrowed by borrowers. The borrowers pay the lenders, but there is no time requirement on when the borrowers need to repay the loan. Ultimately at some point, the borrowers will repay with interest, but is it not possible that I may or may not see a return based on the frequency of repayments by borrowers?
For example, say I deposit USDC today and withdraw in 1 month, and my deposit was borrowed. But by the time I want to withdraw, it hasn't been repaid to realize the interest. I'm just trying to figure out how Aave/Compound etc. work. Can someone point me in the right direction?"
- Aave Protocol
- Health Factor
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1All funds go into a pool and you are paid from that pool on the assumption borrowers will pay the interest due, either by repayment or by liquidation. Check for more info.
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Aave is a decentralized non-custodial liquidity protocol where users can participate as depositors or borrowers.
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