> For the complete documentation index, see [llms.txt](https://udonfi-1.gitbook.io/udonfi-docs/llms.txt). Markdown versions of documentation pages are available by appending `.md` to page URLs; this page is available as [Markdown](https://udonfi-1.gitbook.io/udonfi-docs/core-concepts/supply.md).

# Supply

When you supply assets to Udon Finance, you're depositing your digital holdings into a decentralized ecosystem. Instead of a traditional bank, your assets are pooled and managed by smart contracts, fueling the protocol's liquidity.

Why participate as a supplier? The benefits are compelling:

* **Earn Passive Income:** By contributing tokens to Udon's liquidity pools, you automatically begin to accrue interest. This isn't a fixed rate; it's **dynamic**, adjusting in real-time based on market demand. As borrowing activity increases, so can your earnings, ensuring your crypto is constantly working for you.

{% hint style="info" %}
*Imagine your digital assets growing independently, generating returns while you focus on other priorities.*
{% endhint %}

* **Unlock Collateral Potential:** Your supplied assets serve a dual purpose. Beyond earning interest, they can be used as collateral to borrow other tokens from the protocol. This lets you access necessary liquidity without selling your crypto holdings.

## How earnings are calculated

The interest rate you earn as a supplier is determined by on-chain metrics, primarily:

* **Borrow Utilization Rate:** The proportion of assets currently borrowed from a pool relative to the total supplied. A higher utilization rate typically results in a higher earning rate for suppliers, since borrowing demand is greater.
* **Protocol Parameters & Oracles:** Parameters for both suppliers and borrowers — including interest rates and collateral requirements — are governed by Udon's smart contracts. These parameters are dynamically influenced by real-time market data sourced from Oracles, ensuring fair and accurate adjustments.

As the community supplies, borrows, repays, or withdraws assets, Udon's smart contracts recalibrate interest rates to maintain equilibrium and fairness within the system. It's a responsive, self-regulating financial environment designed for optimal performance.


---

# 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. Learn more at gitbook.com.

## Querying This Documentation
If you need additional information that is not directly available in this page, you can query the documentation dynamically by asking a question.

Perform an HTTP GET request on the current page URL with the `ask` query parameter, and the optional `goal` query parameter:

```
GET https://udonfi-1.gitbook.io/udonfi-docs/core-concepts/supply.md?ask=<question>&goal=<endgoal>
```

`ask` is the immediate question: it should be specific, self-contained, and written in natural language.
`goal` is optional and describes the broader end goal you are ultimately trying to accomplish on behalf of the user. GitBook uses it to tailor the answer towards what is most useful for that goal.

The response will contain a direct answer to the question and relevant excerpts and sources from the documentation.

Use this mechanism when the answer is not explicitly present in the current page, you need clarification or additional context, or you want to retrieve related documentation sections.