Illustration of a Lender Earning Passive Yield While Unmatched

In Step 1, a Lender creates an offer and deposits 1000 USDC. The USDC enters the variable rate pool where it starts earning a variable rate until matched. As a second order effect, the variable rate decreases as the variable pool's supply is increased.

In Step 2, a borrower matches with the lender. The USDC is sent from variable rate pool to the borrower. As a second order effect, the variable rate increases.

In Step 3, the borrower pays back the loan at or before the due date, and the funds once more end up in the variable rate pool earning variable rate interest for the lender.