> For the complete documentation index, see [llms.txt](https://wiki.arcx.money/llms.txt). Markdown versions of documentation pages are available by appending `.md` to page URLs; this page is available as [Markdown](https://wiki.arcx.money/application/supplying/expected-returns-and-risks.md). # Expected returns and risks ### Fees In return for supplying assets to Borrowers, Lenders will receive a portion of fees generated on the platform. Currently, 90% of the interest and borrow fees are returned to Lenders, while 10% goes to ARCx to fund further development and growth. ### Risks The profit earned from a Borrower is equal to the net revenue earned from that Borrower minus the losses they incur from unprofitable liquidations. Revenue is earned from interest, borrow fees and liquidations, while losses are sourced purely from liquidations. For LTV values close to or above 100% (e.g. for a user with a Score of 999 borrowing in the WETH-C vault), a liquidation event may result in toxic debt (i.e. where the value of the sold collateral is less than the debt outstanding). The liquidation mechanism must always compensate the liquidator for performing the liquidation. Usually this compensation comes out of the Borrower’s excess collateral in the case of an over-collateralized loan. If there is not excess collateral to cover both the debt and the liquidators compensation, then the offset is taken from the pool, representing toxic debt. Note that in the case of a 100% LTV liquidation, value is removed from the supply pool and sent to the ARCx fee collector. However, ARCx can return the liquidated funds to the pool to cover the loss in value, and thus the system as a whole may break even. --- # Agent Instructions This documentation is published with GitBook. GitBook is the documentation platform designed so that both humans and AI agents can read, navigate, and reason over technical content effectively. Learn more at gitbook.com. ## Querying This Documentation If you need additional information that is not directly available in this page, you can query the documentation dynamically by asking a question. Perform an HTTP GET request on the current page URL with the `ask` query parameter, and the optional `goal` query parameter: ``` GET https://wiki.arcx.money/application/supplying/expected-returns-and-risks.md?ask=&goal= ``` `ask` is the immediate question: it should be specific, self-contained, and written in natural language. `goal` is optional and describes the broader end goal you are ultimately trying to accomplish on behalf of the user. GitBook uses it to tailor the answer towards what is most useful for that goal. The response will contain a direct answer to the question and relevant excerpts and sources from the documentation. Use this mechanism when the answer is not explicitly present in the current page, you need clarification or additional context, or you want to retrieve related documentation sections.