Lending

Lenders supply assets to a pool (e.g. DAI, USDC) by depositing them in the protocol. For this service, they gain an interest on the assets they supply (i.e. the supply rate). These assets are then made available for borrowers, who both pay an interest as payment and put up tokenized assets of their own as collateral to be able to borrow assets supplied by lenders.

When users lend to the protocol, the earn mTokens. These tokens are yield-bearing, as they are a vehicle for Mystic to distribute interest to lenders. Suppliers share the interest paid by borrowers of their assets corresponding to the average borrow rate times the utilisation rate. Mystic adopts the same distribution methodology as Aave, which can be seen in detail here.