🌳Lender Compounding
Compounding is your friend when it comes to lending!
Imagine you decide to lend $10,000 to the Skew protocol. The beauty of this protocol is that it allows you to manually compound your earnings by continually lending out not only your initial deposit, but also the interest you earn every week. In simpler terms, every time you earn interest you don't have to immediately take it out; instead, you could lend it again through the protocol. This process significantly boosts your earnings over time. Let's break down how this works and how quickly you can recover your initial deposit with your earnings and grow your crypto assets.
The Basic Assumptions:
Your Loan: You start by lending $10,000 in stable coin.
Interest Rate: The protocol offers up to a 20% annual interest rate.
Compounding: The key here is that the lender is manually compounding weekly. This means you earn interest not only on your original $10,000 but also on the interest that keeps adding up every week.
What Happens to Your Money:
Each week, the interest you earn can be put to work in a new load. This increased amount then earns interest in the following week, and this cycle continues. It's like rolling a snowball down a hill; it keeps getting bigger as it rolls.
The Magic Number - 3.5 Years:
The exciting part is how quickly your money grows. In just about 3.5 years, or specifically - 181 weeks, the total amount you have in the protocol (your initial $10,000 plus all the compounded interest) will double to $20,000. Assuming you re-lend your earnings each week at the same rate, in about 42 months, you've essentially earned another $10,000 just in interest!
| Week | Starting Amount | Interest Earned | Total Amount |
|---|---|---|---|
1 | $10,000.00 | $38.46 | $10,038.46 |
2 | $10,038.46 | $38.61 | $10,077.07 |
... | ... | ... | ... |
180 | $19,880.24 | $76.46 | $19,956.70 |
181 | $19,956.70 | $76.76 | $20,033.45 |
The Takeaway:
By choosing to lend through the Skew protocol and continually resupplying your interest as a loan, you're not just earning interest on your initial deposit; you're earning interest on your interest. This compounding effect dramatically increases your earnings, allowing you to grow your initial deposit in a relatively short period. It's a smart way to make your crypto work harder for you and to double your investment within 3.5 years!
Last updated