> For the complete documentation index, see [llms.txt](https://jpycompound.gitbook.io/jpycompound-docs/llms.txt). Markdown versions of documentation pages are available by appending `.md` to page URLs; this page is available as [Markdown](https://jpycompound.gitbook.io/jpycompound-docs/lending/basis.md). # Basis ## The Basic Welcome to the **JPYCompound Lending Core**.\ Lending and borrowing are at the heart of JPYCompound’s features. By enabling users to deposit **JPY stablecoins** and earn interest, we create the foundation for sustainable liquidity. This liquidity allows borrowers to access capital in yen terms — without the FX risks tied to USD markets. Borrowing activity and the interest generated power the platform, while also creating opportunities for liquidators to profit from necessary liquidations, ensuring the overall health and stability of the ecosystem. In addition, **Real Yield in JPY** provides further incentives to borrowers in select lending markets, strengthening the lending loop and encouraging deeper yen-denominated liquidity. Continue to the next page to learn more about these symbiotic components of the JPYCompound protocol. ### Do more with your JPY stablecoins With **JPYCompound**, investors can maximize the utility of their assets without having to sell them. Deposit JPY stablecoins to earn yield, borrow against your holdings, or participate in governance — all while staying in yen terms and avoiding unnecessary FX risk. By enabling lending and borrowing in JPY, JPYCompound expands DeFi beyond its USD-centric base layer and unlocks new opportunities for sustainable yield generation. *** ### Lending At the core of JPYCompound are **lending pools**, where depositors supply JPY stablecoins as liquidity. * In return, lenders receive **aTokens**, which represent their deposit position. * aTokens are **interest-bearing tokens** that automatically accrue yield proportional to the lending market’s activity. * The value of aTokens is pegged 1:1 to the underlying deposited JPY stablecoin. Lenders can transfer or trade their aTokens freely, making them composable across other DeFi protocols. **How it works:**\ Connect your DeFi wallet, deposit your chosen JPY stablecoin, and your liquidity becomes instantly available to borrowers. From that moment, your aTokens start generating yield. *** ### Borrowing Borrowers on JPYCompound can deposit assets (JPY stablecoins or supported collateral) and borrow other assets against them. * Borrowed positions are represented by **DebtTokens**. * **VariableDebtTokens** track variable interest loans. * **StableDebtTokens** track stable-rate loans. * DebtTokens accrue interest based on market rates, and are burned when loans are repaid. Borrowers are critical to the ecosystem: their activity generates interest for lenders, while also fueling additional liquidity demand. In selected markets, **JPYCompound incentives** may be distributed to borrowers to further stimulate lending and borrowing activity. Borrowing is limited by a **Loan-to-Value (LTV)** system, ensuring collateral ratios remain safe. See the **Risk Factors** section for more details. *** ### Interest Rates Interest rates within JPYCompound fluctuate dynamically based on each market’s **utilization ratio** (borrowed liquidity vs. available liquidity). * **High liquidity → lower interest rates**, encouraging borrowing. * **Low liquidity → higher interest rates**, incentivizing repayments and restoring market balance. Each JPY stablecoin market will include a **Utilization vs. Interest Rate chart**, allowing users to track current rates transparently. Additionally: * A portion of borrower interest is distributed to **aToken holders** (lenders). * A portion flows to the **protocol reserve**, providing protection against bad debt and ensuring long-term sustainability. --- # Agent Instructions This documentation is published with GitBook. GitBook is the documentation platform designed so that both humans and AI agents can read, navigate, and reason over technical content effectively. 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