# BTC Lending Pools

Arcus Lending Pools are always over-collateralized, meaning they always backed by at least 150% collateralization ratio. Funds that are borrowed from the lending pool are always backed 2:1 to provide security.

## **Native Bitcoin Lending Pools**

Welcome to simplicity. Lenders supply funds to Arcus that are aggregated into lending pools of each asset type. Single-sided Lending Pools. Pool sizes and APY rates are viewable on the markets page or Dashboard. The lending pools are handled by bitcoin script and indexer/oracle triggers. This robust infrastructure manages multiple lending pools, how they rebalance, and the variable APY formulas. All of these calculations are directly computed and executed on Bitcoin Layer 1 using creative scripting available from Taproot Asset and Ordinal upgrades to Bitcoin.

<figure><img src="/files/VIUruja7CzvxdCPxwYiL" alt=""><figcaption></figcaption></figure>

### **Interest Rates**

The main driver for lending and borrowing interest rates is driven by utilization ratio of each respective lending pool. The yield paid to lenders, and the rates charged to borrowers are calculated by analyzing lending pool utilization ratios, asset volatility, and other risk parameters.

You will pay a periodic variable interest rate on loans based on the loan-to-value (LTV) ratio, asset volatility, and current borrowing demand. Rates typically range from 3% to 20% APY. Variable rate loans charge higher rates during periods of high borrowing demand compared to stable rate loans.

<figure><img src="/files/pwelAQGbOLHlAZxvEVw8" alt=""><figcaption></figcaption></figure>


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