> For the complete documentation index, see [llms.txt](https://docs.prl.one/buttonwood/llms.txt). Markdown versions of documentation pages are available by appending `.md` to page URLs; this page is available as [Markdown](https://docs.prl.one/buttonwood/user-guides/borrow-app/lend-1.md).

# Lend (Buy & Bid)

## How to Lend USDT

To lend on Buttonwood Zero, users need to specify:\
a. The asset they would like to lend cash against (ETH, wBTC, & AMPL)\
b. The desired level of risk (A-Tranche is the safest and paid out first)\
c. Whether they want to Lend through **Buying Bonds** on the Spot Market, or through placing a **Bid Order** on the AMM. 

Lenders earn yield by purchasing discounted tranche tokens, which then have an expected redeemable value of $1.00.\
\
In the below example, a user might purchase ETH A-Tranche tokens for $0.81 per token, implying a discount rate of \~19%, and an implied return of 23.46% ([See More:](/buttonwood/buttonwood-basics/faq.md#how-do-you-calculate-the-discount-rate-interest-rate-what-is-the-difference-between-the-discount-rat) Discount Rate vs. Yield).

![Note: In times of low borrowing demand, lenders could be forced to place Bids rather than Buy on spot market.](/files/SlsK4rfnwWMMzZcpC2jk)

### 'Buy Bonds' Flow:

After selecting the desired bond, the next step is to input how much cash (USDT) to lend:

![The Estimated Tranche Output is the number of Tranche tokens users receive based on the inputted borrow amount](/files/yeSelAohbttKq30GnEhS)

![](/files/c98WmtDFXxGD0vnLl2hV)

![After beginning the process of purchasing the bond users are asked to confirm through their wallet. Currently, the supported wallets include Metamask, WalletConnect, Coinbase, and Authereum.](/files/Ugyq7UCkHRVFyoTmyoxH)

![
](/files/tsiy7AxFNY5ApfcECIch)

![](/files/aJLhFwUjXoQbiH8iDiB3)

### 'Bid Order' Flow:

In times of low liquidity or low borrowing demand, it may make more sense for users to place a bid order, rather than purchasing bonds on the spot market. This allows users to lock in their desired rate. <br>

If the liquidity is thin enough, users might only be able to place a bid:&#x20;

![](/files/6vt8CkFq48Wuc3BT9tch)

After selecting Bid, users decide how much USDT they would like to deposit:

<div align="center"><img src="/files/kkTlKklU91rtyp6ufGxm" alt=""></div>

Lenders then need to set their bid price (Note: Bids must be below market price):

![](/files/wozJ8lyzeTTW5DIsV1Lz)

Then, users confirm their bid:

![](/files/Nc1ud6xoSGagU6bZNGYl)

Confirm the bid with your wallet:

![](/files/6gA280Hh7n3GjJwEUcMw)

\ <br>

![](/files/zF0m1wF1kGcMSTfKArNc)

\
Terms:

* *Collateral Asset*: This is the asset that underlies the tranche tokens. The risk profile of the tranche tokens is related to the changes in value of the collateral token.&#x20;
* *Tranche:* On the spot market, lenders can choose between A-Tranche and B-Tranche to lend against. The A-Tranche is paid out first and therefore receives a lower discount rate in normal market conditions.&#x20;
* *CDR*: This is the current collateralization ratio of the bond. Generally, higher CDR values are safer to loan against because it indicates a larger buffer before tranche tokens begin to lose value.
* *Maturity Date*: This is the number of days until the bond matures. Maturity is the date upon which the tranche tokens are redeemable for underlying collateral tokens.&#x20;