Who is paid

Borrow 4%, utilization 75%, no skim. What do suppliers earn?

• 4%, because there is no skim
• 3%, because only the borrowed 75% pays interest
• 1%, the gap between borrow and utilization

You compare a borrow APR with a supply APY to find the skim. What goes wrong?

• Nothing, APR and APY are the same number
• The two rates are on different bases, so the implied skim comes out wrong
• The answer is right but in basis points