Providing Liquidity
This section explains how earners provide liquidity and obtain yield.
How earners provide liquidity to Concrete
Concrete offers different vaults with Earn strategies where earners can choose to deposit their funds.
Each of these vaults are asset specific and provide different yield according to the underlying asset management strategy, the revenue earned from protecting loans and CT token emissions.
Once an earner provides liquidity to one of these vaults, a portion of the funds are reserved to protect loans that borrowers take on Concrete and the rest is actively managed by the protocol.
The amount reserved to protect loans is determined by the probability engine and the required funds are allocated to the liquidity router component. This way, the borrow side of the product can pull liquidity to protect loans.
When earners deposit liquidity into a vault, they receive a token that represents their position in the vault. The protocol denominates these as cTokens.
Figure 1, below, shows the flow of funds between different sources of the system in an abstracted manner when earners provide liquidity.
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