Getting Started as a Liquidity Provider

LP Strategy:
├── Post LEND order at 7.5% APY
├── Post BORROW order at 8.5% APY
└── Spread: 1.0% (100 basis points)

When both sides match:
  - Lend $100,000 at 7.5% → Receive $7,500/year
  - Borrow $100,000 at 8.5% → Pay $8,500/year
  - Net cost: $1,000/year

Wait, that's negative? Here's the real strategy:
  - Lend $100,000 at 7.5% (earn from borrowers)
  - Borrow $100,000 at 8.5% (from lenders)

Actually:
  - You LEND (someone borrows from you) at 8.5% → Earn $8,500
  - You BORROW (someone lends to you) at 7.5% → Pay $7,500
  - Net: +$1,000 profit on $100,000 deployed

Market State:
  Best lend ask: 8.0% (lenders want at least 8%)
  Best borrow bid: 7.5% (borrowers want at most 7.5%)
  Current spread: 50bps

Your Orders:
  Lend ask: 8.3% (you'll lend to borrowers at this rate)
  Borrow bid: 7.2% (you'll borrow from lenders at this rate)
  Your spread: 110bps

When Orders Match:
  - Borrower matches your 8.3% lend → You earn 8.3%
  - Lender matches your 7.2% borrow → You pay 7.2%
  - Net: 1.1% spread on matched capital

Scenario: Your lend order fills but borrow doesn't

Result:
  - You're now a lender at 8.3% (not bad)
  - But no matching borrow to offset
  - Your spread profit doesn't materialize
  - You just have a regular lending position

You post:
  - Lend at 8.3%
  - Borrow at 7.2%

Market shifts UP:
  - New lenders want 9%
  - Your 7.2% borrow won't fill
  - You're stuck lending at 8.3% while market offers 9%

Market shifts DOWN:
  - New borrowers want 6%
  - Your 8.3% lend won't fill
  - You're stuck borrowing at 7.2% while market is 6%

To market make with $100,000:
  - Need ~$125,000 collateral for borrow side (80% LTV)
  - Plus $100,000 for lend side
  - Total capital: $225,000+