# Interest Allocation: Case Study To illustrate how self-lending reduces net borrowing costs, consider a standardized example involving **User A**, who borrows $5,000 at 50% APR to open an LVF position. Instead of relying entirely on external lenders, User A supplies **$4,000 of the lending pool themselves** using a flashloan-enabled self-lending loop—meaning 80% of the interest paid to lenders is redirected back to them. ### **Interest Distribution Breakdown (User A)** | **Component** | **Amount** | | ---------------------------------- | ---------------------- | | **Total Interest Paid** | $2,500 (50% of $5,000) | | Interest to Lenders (90%) | $2,250 | | – Returned to User A (80% share) | $1,800 | | – Paid to External Lender (User B) | $450 | | Protocol Fee (10%) | $250 | | **Net Interest Cost (User A)** | **$700** | 📌 *By supplying the majority of the lending pool, User A effectively reclaims 80% of the interest paid to lenders—lowering their **real** cost from $2,500 to just $700. This drastically improves capital efficiency without impacting lender returns or protocol revenue.* *** #### --- # 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.peapods.finance/net-interest-implications-lvf/interest-allocation-case-study.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.