# How It Works ### How It Works Superposition works as a decentralized credit platform. It connects lenders to borrowers, generating yield for the former and providing credit capital to the latter. **Economic Model** Each supported asset forms an independent lending pool. Lenders receive their pro rata share of the interest payments borrowers pay upon borrowing from these pools. Under this framework, the entire pool itself has a single interest rate, which all borrowers of that specific asset pay. **Floating Interest Rates** The interest rate for each instrument floats. It is a function of the utilization of the pool (ratio of borrowed capital to supplied capital), and changes immediately with each change to the utilization. **Perpetual Tenor** The loans have no fixed maturity and no repayment schedule. They are perpetual, with interest compounding continuously until the borrower repays the loan. **Collateral** Every borrower must maintain a minimum amount of equity in their portfolio. That is, the value of their collateralized assets must exceed the value of their debts by some specified margin. Superposition makes use of Concordia’s risk engine, which allows for cross-collateralization within a portfolio. All assets and all liabilities are considered together when setting the minimum equity for a portfolio. --- # Agent Instructions: 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: ``` GET https://docs.moveposition.xyz/how-it-works.md?ask= ``` The question should be specific, self-contained, and written in natural language. 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.