> For the complete documentation index, see [llms.txt](https://jpydf.gitbook.io/jpy-defi/llms.txt). Markdown versions of documentation pages are available by appending `.md` to page URLs; this page is available as [Markdown](https://jpydf.gitbook.io/jpy-defi/stability-pool/yield-sources.md).

# Interest, Fees and Liquidation Collateral

Borrowing interest and upfront fees, liquidation collateral, and collateral-strategy yield follow separate processing paths in JPY DeFi.

## Three flows

| Flow                                | How it arises                                                                                                                                                                                   | Where it goes                                                                                                                                                                                                            |
| ----------------------------------- | ----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------- | ------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------ |
| Borrowing interest and upfront fees | Accrue as borrower debt and are minted as JPYdf when the accounting is updated ([Interest Rates & Trove Delegation](/jpy-defi/borrowing-and-trove-management/interest-rates-and-delegation.md)) | 75% is sent to the Stability Pool and recorded as JPYdf that each depositor can claim in proportion to their deposit. 25% is sent to the dedicated recipient as [Protocol Treasury](/jpy-defi/governance/pil.md) revenue |
| Liquidation collateral              | Collateral the Pool receives when Stability Pool JPYdf offsets debt in a liquidation ([Liquidations](/jpy-defi/borrowing-and-trove-management/liquidations.md))                                 | Recorded in the Stability Pool as collateral each depositor can claim in proportion to their deposit                                                                                                                     |
| Collateral-strategy yield           | Revenue from deploying deposited collateral into external protocols ([Collateral Strategies](/jpy-defi/collateral-and-pricing/strategies.md))                                                   | Not added to borrowers' collateral or to claimable JPYdf or collateral in the Stability Pool; it accumulates in a multisig managed by the protocol (the Protocol retention Safe)                                         |

Increases in wstETH's stETH conversion rate (staking accrual) are not part of collateral-strategy yield; they remain in the borrower's collateral value. Conversely, if a venue's valuation falls below principal or a loss is confirmed, the dToken backing ratio can lower the collateral's valuation.

There are no continuous emissions of external reward tokens.

## Changes in quantities and valuations

The quantities of JPYdf and collateral that become claimable vary with borrower debt and rates, upfront-fee activity, and liquidations. Collateral valuations also change with market prices, and no fixed amount is guaranteed.