> For the complete documentation index, see [llms.txt](https://valos.gitbook.io/valos/llms.txt). Markdown versions of documentation pages are available by appending `.md` to page URLs; this page is available as [Markdown](https://valos.gitbook.io/valos/earn-explained.md). # Earn explained The Earn Lending Product is designed to generate yield on various digital assets by lending them to some of the most reputable market makers in the cryptocurrency industry. These market makers utilize the borrowed funds to provide essential liquidity on major exchanges such as Binance and Coinbase. How It Works: * Loan Arrangement: Users enter into a loan with Valos under the applicable legal terms and transfer their assets to Valos as part of the lending process. Valos subsequently enters into separate lending agreements in its own name with select market makers, lending the assets to these market makers. * Liquidity Provision: The market makers deploy the borrowed assets to populate the order books of exchanges, ensuring that the bid and ask prices are closer to the actual market value of the assets. This activity enhances price efficiency and reduces slippage, resulting in a more seamless trading experience for users of the exchanges. * Market Making Strategies: The market makers employ sophisticated algorithms to determine the fair price of assets. They quote prices on both sides of the market—buy and sell—profiting from the spread between these quotes. The algorithms they use are designed to react to market conditions in real-time, ensuring that prices remain competitive and reflective of true market values. * Enhanced Market Liquidity: By lending assets to these market makers, the overall liquidity of the cryptocurrency market is significantly improved. This enhanced liquidity benefits all market participants by providing tighter spreads, better pricing, and a more stable trading environment. Without this provision of liquidity, market conditions could deteriorate, leading to wider spreads, greater slippage, and potentially adverse trading outcomes for users. * Yield Generation: In return for the assets used in their market-making activities, the market makers pay monthly interest to Valos. This interest is used by Valos to pay interest to users of the Earn Lending Product on their loans. Benefits: * Optimized Yields: Users earn competitive yields on their assets without needing to actively trade or manage them. * Market Efficiency: By supporting market makers, users indirectly contribute to more efficient and fair markets, benefiting all participants. * Security and Oversight: Continuous monitoring and rigorous borrower assessments ensure that the product is both secure and reliable. --- # 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://valos.gitbook.io/valos/earn-explained.md?ask=&goal= ``` `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.