APR Differential: Self-Lending vs External Lending

This section compares the same lending market from the perspective of two different participants:

• User A: A borrower who self-supplies 80% of the lending pool

• User B: An external lender who contributes the remaining 20%

Although both interact with the same interest rate curve, their net APR outcomes diverge significantly due to self-lending mechanics.

Effective APR Comparison

Role	Basis	% of Lending Pool	Gross APR	Net APR
User A (Self-Lending)	$5,000 borrowed / $4,000 supplied	80%	50.0%	14.0%
User B (External Lender)	$1,000 lent	20%	45.0%	45.0%
APR Spread (Lender yield vs Borrow cost)	-	-	-	+31.0%

📌 This asymmetric structure enables lenders to earn full returns while borrowers dramatically reduce their net cost—without subsidy or emissions. It creates a capital-efficient win-win that aligns incentives between both roles.