# Earning Interest Understanding the mechanisms through which interest is earned by Lenders can help maximise returns when lending on Kasu. During the Clearing Period at the end of each weekly epoch, interest is calculated and then accrued and auto-compounded into your balance, and reflected in your updated loan balance at the beginning of each epoch. This means your interest earnings are not distributed or claimed manually — instead, they’re automatically added to your principal, allowing your balance to grow over time through compounding. Accordingly, Lenders can earn compound interest (i.e. earn interest upon interest) every epoch (compounded every 7 days). **Given that interest accrues every weekly epoch, APY represents the total effective interest return over a year assuming a Lender leaves both their principal and earned interest in the Lending Strategy without withdrawing funds. APY therefore takes into account the effect of compound interest (auto-compounding), unlike APR, which only shows simple interest. Therefore, if a Lenders withdraws any funds, their effective interest return may be lower than the stated APY. Refer to the** [**Calculating My Interest** ](https://app.gitbook.com/o/l2F2r78SnLaraOWWlcmq/s/6mmoq11NulYqMZLic5rJ/~/changes/27/lending-with-kasu/calculate-my-interest)**Section for full details.** A Lender's Loyalty Level also influences total APY. As explained in the[ Lender Loyalty Levels Section](/how-kasu-works/lender-loyalty-levels.md), Lenders can boost earnings through bonus interest, paid in $KASU tokens. This assumes all other factors remain constant in terms of no adverse fluctuations related to the $KASU token price affecting a Lender's Loyalty Level. It's important to note that 10% of interest earned by Lenders is deducted as fees, with half this amount allocated towards Protocol Fee Sharing for Lenders, and the remaining half to the Kasu protocol to fund operations. No fees are applied to Lenders’ bonus interest. Therefore, the APY quoted on the Kasu dApp refers to Gross APY (before fees). Refer to 'Fees Explanation and Gross APY Disclosure' in the [Important Information Section](/important-information-when-lending/important-information.md) for full details With regards to interest earnings associated with USDC lending, the net interest earnings amount (after fees) is automatically added to each Lender’s loan balance at the beginning of each epoch. With regards to bonus interest paid in $KASU tokens, the amount earned each epoch accumulates and is reflected in the $KASU Locking section of the platform. Lenders can claim their bonus interest ($KASU tokens) at any time, which will be paid at the end of each epoch. By understanding the mechanics of interest earnings on Kasu, Lenders can better discern their potential returns and make more informed decisions about risk tolerance and lending objectives. --- # 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.kasu.finance/lending-with-kasu/earning-interest.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.