In PinkPea, users can easily earn interest by adding their assets into pools. However, they can also borrow a limited amount from the protocol. PinkPea Finance aggregates assets supplied as collateral by users (Lenders) into a pooled fund, which becomes available for borrowing. The collateral and borrowed value are not one-for-one matched, meaning borrowers do not have to borrow specifically against the exact amount and value of deposits.

There are two pools in PinkPea Finance, a single-asset pool, and a liquidity provider pool. Users can deposit supported assets into one of the pools and get a pToken representing the users’ lending position and the share of the total liquidity. Lenders will receive rewards in two parts: the interest paid by the borrowers and the mining rewards. As time goes by, lenders can claim more assets with their pToken as the total liquidity pool and mining revenue grows.

The prerequisite of borrowing is to provide collateral assets into the pool fund. Users will receive interest on the collateral assets they contribute to the liquidity pool. Each collateral asset will have a specific mortgage rate according to the conditions of the asset class, such as the total market cap and price trends.
PinkPea Finance calculates the borrowing limit as:

The utilization rate determines the lending and borrowing interest rates, which reflect the demand to borrow the assets.
The borrowing rate consists of two parts: a base rate and the additional utilization rate. Each asset will begin with a base rate, and the utilization rate will adjust according to the utilization level.
M varies according to the utilization level. The larger the utilization level value, the faster the borrowing interest will increase, preventing excessively rapid growth of the usage rate, causing a long-term lack of liquidity in the system. The lending interest is positively related to the borrowing interest and utilization rate. PinkPea Finance will also charge a specific management fee from the borrowing interest. Currently set at 10%.
Besides the interest, users will also receive mining rewards in the form of PEA. The mining interest varies in different pools. Users can effortlessly check the rates on the mining page.
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