# Lending Protocols

{% hint style="warning" %}
The abbreviation of **Lending Protocols** can also be called **LP**, but it is **NOT** **EQUAL** to "Liquidity Pool".
{% endhint %}

**DeFi Lending Protocols** are platforms that grant users access to lend and borrow assets without a centralized service or an intermediary in between. Using these platforms, borrowers deposit cryptocurrency assets onto the DApp as collateral to gain access to their borrowing, whereas lenders get an interest return by lending their cryptocurrency. 

As a **unique protocol,** the **Flurry Protocol pools** and **invests** the user-deposited **stablecoins into** these **DeFi platforms**, **earning interest on loans**. In return, users get to **hodl rhoTokens**.

**The** **returns generated by the Flurry Protocol** **via lending on DeFi platforms are of high yield**, and constantly being reevaluated automatically for the best interest return.

Check out how the **Flow of Funds** run in the **yield aggregation process** on Flurry Protocol in this example.

## Flow of Funds through Yield Aggregation

![The fund allocation and distribution throughout the Flurry Protocol and the ecosystem between FLURRY and RHO.](https://480282750-files.gitbook.io/~/files/v0/b/gitbook-x-prod.appspot.com/o/spaces%2F-MgsDYcYxDEhYbYCg_9V%2Fuploads%2FhnEcMMBtP2uk8bQLsx9l%2F0_fRro1YPlmRP0AiPa.png?alt=media\&token=ad2f4306-01ca-48ce-b71a-fe4e75a2745e)

### 1. Deposit of stablecoin funds from users

Users deposit stablecoins in the Flurry Protocol (in this case we use USDT), and they will get **rhoTokens** as proof of their deposit at a 1:1 exchange ratio. If a user deposits 100 USDT, he/she will get 100 rhoUSDT in return initially. Users now become **rhoToken hodlers.** You may find out how to hodl rhoTokens from this portal:

{% content-ref url="../../user-guide/earn" %}
[earn](https://docs.flurry.finance/flurry-finance/user-guide/earn)
{% endcontent-ref %}

### 2. Pooling and investment to DeFi lending pools

The Flurry Protocol will automatically pool all deposited funds together and invest into different DeFi lending pools (DeFi 1, 2, 3, 4 in diagram). We’ll use the BNB Chain's DeFi products for this example.

### 3. Fund investment allocation and optimization

The Flurry Protocol would access the Annual Percentage Rate (**APR**) of different DeFi **yield farming** protocols. The risk factors, gas fees, etc, are tabulated before coming up with an investment allocation on those products to ensure a high-interest return. Check out how Flurry maximizes **APR** through**:**

{% content-ref url="interest-apr" %}
[interest-apr](https://docs.flurry.finance/flurry-finance/the-rhotoken/yield-generation-mechanism/interest-apr)
{% endcontent-ref %}

### 4. Yield Aggregation through gathering yield farming interests 

The DeFi protocols will then begin **yield farming**, whereas the interest earned within will be accumulated and reflected in the Flurry Protocol to achieve **Yield Aggregation**. Let’s say a deposited fund of **100 USDT** has been placed onto 2 different DeFi platforms on BNB Chain, and the **total yield farmed** (interest earned) is **5 USDT** in total.

{% content-ref url="../supporting-strategies" %}
[supporting-strategies](https://docs.flurry.finance/flurry-finance/the-rhotoken/supporting-strategies)
{% endcontent-ref %}

### 5. Minting & distribution of rhoToken interest 

Based on the interests earned (5 USDT from the above example), the **Rebasing Mechanism** will be triggered on a regular basis to automatically mint more rhoUSDT, so to match the interests accrued while keeping the price of rhoUSDT 1-to-1 with USDT. **rhoToken hodlers** will see the rhoUSDT in their wallet grow every day, reflecting the yield (interest) earned to that particular point in time. 

Check out the details for this **Rebasing Mechanism** through this portal:

{% content-ref url="../the-rhotoken-1/elastic-supply-and-rebasing" %}
[elastic-supply-and-rebasing](https://docs.flurry.finance/flurry-finance/the-rhotoken/the-rhotoken-1/elastic-supply-and-rebasing)
{% endcontent-ref %}

### 6. Management fee

Meanwhile, 10% of the interest earned from the deposits of the original USDT will be charged as a management fee. This feature has yet to be executed at the beginning stage. 

### 7. Split and utility of management fees 

The management fee will be split for:

1. Buying back **FLURRY** tokens in the market to support the price of the FLURRY token. The FLURRY token bought back will then be placed again in the FLURRY Snowball (staking) pool;
2. Being kept as a reserve for the sustainable ecosystem;

### 8. Benefits for rhoToken hodlers

**rhoToken hodlers** to enjoy the **FLURRY rewards** during special campaign periods.

In the end, the **FLURRY token hodlers** will benefit from the management fee as it is used to decrease the circulating supply of FLURRY tokens to support its value. FLURRY tokens hodlers will be rewarded with **more FLURRY tokens** from the **Snowball** pool.

Checkout what **Snowballing** is and how to Stake Flurry through the portal below:

{% content-ref url="../../user-guide/snowball" %}
[snowball](https://docs.flurry.finance/flurry-finance/user-guide/snowball)
{% endcontent-ref %}

Flurry Finance works with the leading and best DeFi protocols and will aggressively add new protocols to our pool of choice options after review and audit before onboarding. 

Once Flurry moves to a decentralized model, the **FLURRY** **token** will be used as a governance token to decide which Lending Protocols and DApps to allocate funds towards.