# Pencils Protocol Farming

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## **Pencils Protocol Farming will initially support five types of assets:**

* ETH (Native ETH, WETH, LSDs, LRTs)
* WBTC (EVM-compatible BTC collateral tokens)
* Stablecoins
* Scroll Token (when Scroll launches)
* Pencils Protocol Token

When you deposit tokens into a Pencils Protocol Vault, your funds enter a pool that borrowers can access to leverage their positions. As a depositor, you’ll earn a yield generated from the interest paid by these borrowers.

Pencils Protocol Vaults prioritizes the safety of your deposited funds by carefully evaluating each borrower’s principal and imposing strict limits on their leverage. This approach ensures that your assets remain secure.

As a depositor, you’ll enjoy a diverse range of rewards. In addition to the yield from dynamic interest rates, you’ll also earn Pencils (Pencils Protocol points) and Scroll points, and many other enhanced yields from our partners. These rewards provide additional opportunities for you to benefit from your participation in the platform.

## Deposit APR <a href="#a499" id="a499"></a>

The APR earned by depositors in Pencils Protocol Vaults is determined by a floating interest rate model, similar to those used in mainstream lending protocols. This model adjusts the interest rate based on the availability of funds in the deposit pool, ensuring that depositors are rewarded fairly for their contributions.

When the utilization rate of the deposit pool is high, meaning that a larger portion of the funds is being borrowed, the interest rate (APR) will increase. This higher APR rewards depositors for providing liquidity when it is in high demand and encourages more users to deposit their tokens.

Conversely, when the utilization rate is low, indicating that there is an abundance of available funds in the deposit pool, the interest rate will decrease accordingly. This dynamic adjustment helps maintain a balanced ecosystem and prevents overly high interest rates during periods of low borrowing activity.

By employing this floating interest rate model, Pencils Protocol Vaults ensures that depositors receive competitive returns on their tokens while also promoting a stable and efficient lending environment.

## How to Get Started: <a href="#d7b1" id="d7b1"></a>

1\. Click “Deposit” on the Staking pool page and enter the deposit amount.

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2\. Check and claim deposit income in the “Supply & Borrow info” section.

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3\. Switch to “Withdraw” in “Manage” to withdraw the principal.

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## Expanding Opportunities on Scroll <a href="#id-691f" id="id-691f"></a>

Pencils Protocol Farming offers users a secure and rewarding way to participate in the Scroll ecosystem. By supporting a wide range of assets, including ETH, WBTC, stablecoins, and high-quality ERC20 tokens, Pencils Protocol ensures that users have ample opportunities to stake their preferred tokens and earn competitive returns.

Users will receive a number of benefits including yield from farming, Pencils, and Scroll points. These rewards can be used to unlock exclusive benefits, such as boosted token allocations from projects that launch on Scroll, increased liquidity mining rewards, and access to limited-edition merchandise.

As Pencils Protocol continues to expand its offerings and collaborate with top-tier partners, users can expect even more innovative features and valuable rewards. By participating in Pencils Protocol Farming, users not only support the growth of the Scroll ecosystem but also position themselves to maximize their returns and take advantage of the exciting developments within the Pencils Protocol platform.


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