> For the complete documentation index, see [llms.txt](https://docs.aeralend.app/llms.txt). Markdown versions of documentation pages are available by appending `.md` to page URLs; this page is available as [Markdown](https://docs.aeralend.app/how-it-works/interest-and-fees.md).
# Interest and fees
Aera has no fixed rates. Both the borrow rate and the lend rate are computed from **utilization** — the share of the pool currently lent out — and they change on every transaction anyone makes.
## The borrow curve
Two straight lines meeting at a kink.
| Utilization | 0% | 60% (the kink) | 100% |
| ----------- | -- | -------------- | ---- |
| Borrow APR | 2% | 10% | 90% |
Below the kink the rate climbs gently. Above it, the same 40 points of utilization cost 80 points of rate.
{% hint style="info" %}
**The curve is quoted as an APR; the market table shows APY.** The three figures above are nominal annual rates — the program divides them by the number of slots in a year and charges that much per slot. Because the interest accrues into an index every slot, it compounds, so a year at a 10% nominal rate actually costs about **10.5%**. That compounded figure is what the market screen shows under **Borrow APY** and **Lend APY**, which is why it reads slightly higher than the number here.
{% endhint %}
That shape is not a pricing preference — it is what keeps the pool liquid. When withdrawals start to bite, borrowing becomes expensive fast, which pushes borrowers to repay and pulls new lenders in.
The utilization bar sits under the two rates it sets. The tick on it is the kink.
## What lenders actually earn
$$\text{lend rate} = \text{borrow rate} \times \text{utilization} \times 0.85$$
Two things follow, and both surprise people:
* **You do not earn the borrow rate.** Your COOK is not all lent out — at 60% utilization only 60% of the pool is earning.
* **The 15% reserve factor is Aera's share of the interest**, not a fee on your principal.
At the kink: `10% × 0.60 × 0.85 ≈ 5.1%`.
Interest accrues **per slot**, not on a schedule. There is nothing to claim and no compounding decision.
{% hint style="info" %}
Every rate in the interface is prefixed `~`. It is the annualised rate implied by utilization at the slot the page last read. Nobody can quote a fixed APY on a floating-rate pool, and a figure without the tilde would be a promise the mechanism cannot keep.
{% endhint %}
## The three fees
| Fee | Rate | When | Taken from |
| -------------------------- | ------------- | -------------------- | --------------------------------- |
| Reserve factor | 15% | Continuously | The interest borrowers pay |
| Origination | **0.15%** | Once, at borrow time | What you receive |
| Protocol liquidation share | up to 0.75 pp | At liquidation | The 8% bonus, **not** added to it |
Everything else is free: lending, withdrawing, repaying, locking and unlocking collateral all cost nothing beyond the network fee.
### Origination
Charged once when a loan is created, and taken out of the payout rather than added to the debt. Borrow 200 COOK and you **receive 199.70** and **owe 200**.
The fee, the payout and the resulting health, all stated before you sign.
It exists because interest alone rewards *long* loans and charges nothing for opening one. Without it a borrower can open and close positions repeatedly at almost no cost — fine for them, and a real cost to the pool, since every borrow and repay moves the utilization every other lender's rate is computed from.
### The liquidation share
{% hint style="info" %}
Aera's share is carved **out of** the 8% bonus, never added to it. With a 0.75 percentage-point share the borrower still pays exactly 8% — 7.25 to the liquidator, 0.75 to the protocol. It is never 8.75%, and your cost is identical whether the share is zero or at its ceiling.
{% endhint %}
**Core has no share configured today**, so a liquidator currently receives the whole 8%.
---
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