# Overview

BiFi is a cross-chain lending platform operating on Bifrost Network. As DeFi platform, the deposit APY and borrowing interest rate are adjusted in real-time according to market supply and demand.

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**1. The Relationship between Supply APY & Borrow APY**

As a DeFi lending platform, supply APY and borrow APY are determined by the users. When there are more deposited assets and low borrowing demand, they supply APY decreases. On the other hand, when borrowing demand increases, which lead decrease in liquidity, will cause the supply APY to increase. Basically the supply APY and borrow APY are determined by the supply and demand of the liquidity in BiFi.

**2. When Supply APY is shown as 0%**

In BiFi, the supply APY for some tokens may appear as 0% due to the following reasons:

* Lack of Demand: If there are few or no users borrowing a specific token, no interest rate is generated for the deposited assets.
* Low Liquidity: When the amount of a token borrowed in minimal, or users repay loans and immediately redeposit, liquidity remains stagnant.
* Market Volatility: The DeFi market is highly volatile so even if the supply APY is 0% at certain moments, it adjusts dynamically when demand arises.

**3. Principles of Loan Liquidity and Market APY Fluctuations**

The supply APY and borrowing interest rates fluctuate based on the following market conditions:

| Condition                                 | Expected Change                         |
| ----------------------------------------- | --------------------------------------- |
| Increased borrowing demand                | Supply APY rises & Borrowing rate rises |
| Decreased borrowing demand                | Supply APY falls & Borrowing rate falls |
| Surge in loan repayments                  | Supply APY falls                        |
| Surge in deposited assets                 | Supply APY falls                        |
| Reduced liquidity (increased withdrawals) | Borrowing rate rises                    |

Thus, the BiFi market is automatically adjusted in real time based on user behavior and liquidity changes.