# Overview

### How It Works <a href="#how-it-works" id="how-it-works"></a>

<div data-with-frame="true"><figure><img src="/files/l5osKFcMpSrN82q4Hmrk" alt=""><figcaption></figcaption></figure></div>

AlphaFi Lend operates as a liquidity pool where suppliers and borrowers interact through smart contracts. Suppliers deposit assets into the protocol and earn interest funded by borrowers. Borrowers post collateral and access liquidity, paying interest on their loans.

The protocol is non-custodial—you maintain control of your assets at all times. All interactions are governed by visible on-chain parameters.

### Core Actions <a href="#core-actions" id="core-actions"></a>

<div data-with-frame="true"><figure><img src="/files/ukU1qaP8q7TZ15G2cNfC" alt=""><figcaption></figcaption></figure></div>

<table><thead><tr><th width="149.1640625">Action</th><th>Description</th></tr></thead><tbody><tr><td><strong>Supply</strong></td><td>Deposit assets to earn interest and enable them as collateral</td></tr><tr><td><strong>Withdraw</strong></td><td>Redeem your supplied assets plus accrued interest</td></tr><tr><td><strong>Borrow</strong></td><td>Take a loan against your collateral</td></tr><tr><td><strong>Repay</strong></td><td>Pay back your borrowed assets to reduce debt</td></tr></tbody></table>

### Positions as NFTs <a href="#positions-as-nfts" id="positions-as-nfts"></a>

<div data-with-frame="true"><figure><img src="/files/E2cXCtPT0HkiPbgZ5L8S" alt=""><figcaption></figcaption></figure></div>

Unlike other money market protocols that issue fungible tokens representing your position, AlphaFi Lend positions are represented as NFTs on Sui. This is a native feature of the Sui blockchain architecture. Your position NFT tracks:

* Assets you've supplied
* Collateral value
* Outstanding borrows
* Accrued interest

### Key Features

* **Lending & Borrowing**: Users can supply supported assets to earn yield, or borrow other assets by providing collateral.
* **0% Borrow Fee**: Borrowers pay interest on their loans, with no additional borrow fee charged by the protocol.
* **Over-collateralized Loans**: All loans are backed by collateral worth more than the borrowed amount. This ensures the protocol remains solvent, even if borrowers default or markets become volatile.
* **Dynamic Interest Rates**: Interest rates adjust algorithmically based on market demand and asset utilization.
* **Liquidation Mechanism**: Under-collateralized positions are automatically liquidated to maintain protocol health.


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