Investors

As an investor on Locale Lending, you can earn yield by staking USDC in lending pools. Your capital funds loans to verified borrowers, and you receive returns from interest payments.

Prerequisites

Before you begin, you'll need:

• ✅ A compatible wallet or authentication method

• ✅ USDC on Arbitrum network

• ✅ Basic understanding of DeFi risks

Step 1: Connect Your Wallet

Locale supports multiple authentication methods:

Wallet Options

Method	Description	Best For
Email	Magic link login	Beginners
Social	Google, Apple sign-in	Convenience
Passkey	Biometric authentication	Security
External Wallet	MetaMask, Rainbow, etc.	Experienced users

Connecting

1. Visit app.locale.cash

2. Click Connect Wallet

3. Choose your authentication method

4. Complete verification

graph LR
    A[Visit App] --> B[Connect Wallet]
    B --> C{Auth Method}
    C -->|Email| D[Magic Link]
    C -->|Social| E[OAuth]
    C -->|Passkey| F[Biometric]
    C -->|Wallet| G[Sign Message]
    D --> H[Connected]
    E --> H
    F --> H
    G --> H

Step 2: Get USDC on Arbitrum

If You Have ETH on Ethereum

1. Go to bridge.arbitrum.io

2. Connect your wallet

3. Select USDC as the token

4. Enter amount and bridge

If You Have Crypto Elsewhere

1. Use an exchange that supports Arbitrum (Coinbase, Binance)

2. Purchase or transfer USDC

3. Withdraw to your Arbitrum address

Need Gas?

Arbitrum transactions require ETH for gas:

• Minimum recommended: 0.001 ETH (~$2-3)

• Locale sponsors most transactions, so minimal ETH needed

Step 3: Complete Verification (Optional)

While basic staking doesn't require KYC, some pools may have requirements:

Retail Investor

• Self-attestation only

• Access to most pools

• Standard stake limits

Accredited Investor

For higher limits and exclusive pools:

1. Navigate to Settings > Verification

2. Complete accreditation questionnaire

3. Upload supporting documents (if required)

4. Receive InvestorCredential upon approval

Step 4: Explore Pools

Finding Pools

1. Navigate to Explore > Pools

2. Browse available lending pools

3. Filter by:

   • Pool Type (Small Business, Real Estate, etc.)

   • APY

   • Risk Level

   • TVL

Understanding Pool Details

Each pool displays:

┌─────────────────────────────────────────┐
│  Small Business Pool #1                 │
├─────────────────────────────────────────┤
│  APY: 9.5%                              │
│  TVL: $1,250,000                        │
│  Utilization: 78%                       │
│  Min Stake: $1,000                      │
│  Management Fee: 2%                     │
│  Performance Fee: 20%                   │
│  Default Rate: 0.8%                     │
│  Active Loans: 12                       │
└─────────────────────────────────────────┘

Key Metrics Explained

Metric	What It Means
APY	Expected annual return
TVL	Total capital in pool
Utilization	% of capital deployed in loans
Default Rate	Historical loan defaults
Min Stake	Minimum investment

Step 5: Stake in a Pool

Staking Process

1. Select a pool from Explore

2. Click Stake

3. Enter stake amount (≥ minimum)

4. Review details:

   • Estimated APY

   • Fees

   • Cooldown period

5. Click Approve USDC (first time only)

6. Click Confirm Stake

7. Sign transaction

sequenceDiagram
    participant Y as You
    participant W as Wallet
    participant U as USDC Contract
    participant S as StakingPool

    Y->>W: Click Stake
    W->>U: approve(StakingPool, amount)
    U-->>W: Approved
    W->>S: stake(poolId, amount)
    S-->>Y: Shares minted

What You Receive

After staking, you receive:

• Pool Shares - Represent your ownership

• Share value increases as pool earns yields

• Displayed in your Portfolio

Step 6: Monitor Your Portfolio

Portfolio Dashboard

Access at Portfolio to see:

• Total staked value

• Current positions

• Unrealized returns

• Transaction history

Position Details

For each stake:

• Original amount

• Current value

• Accrued returns

• Share count

• Stake date

Step 7: Unstaking

Unstaking Process

When you want to withdraw:

1. Go to Portfolio

2. Select position to unstake

3. Click Request Unstake

4. Wait 7-day cooldown period

5. After cooldown, click Complete Unstake

6. Receive USDC

graph LR
    A[Request Unstake] --> B[7-Day Cooldown]
    B --> C[Complete Unstake]
    C --> D[USDC Received]

Partial Unstaking

You can unstake a portion of your position:

• Specify number of shares to unstake

• Remaining shares continue earning

Why the Cooldown?

The 7-day cooldown:

• Protects pool liquidity

• Prevents bank runs

• Ensures stable borrower funding

Understanding Returns

How You Earn

Your Return = (Interest from Loans - Defaults) × Your Share %
            - Management Fee - Performance Fee

Fee Structure

Fee	Rate	Applies To
Management	0-2%	Annual, on your stake
Performance	0-20%	Your realized returns
Staking	0.1%	One-time, on stake amount

Example Returns

For a $10,000 stake in a pool with:

• Gross APY: 12%

• Management Fee: 2%

• Performance Fee: 20%

Gross Returns: $10,000 × 12% = $1,200
Management Fee: $10,000 × 2% = $200
Net Before Perf: $1,200 - $200 = $1,000
Performance Fee: $1,000 × 20% = $200
Your Net Return: $1,000 - $200 = $800
Effective APY: 8%

Risk Considerations

What Could Go Wrong

Risk	Description	Mitigation
Default Risk	Borrowers fail to repay	Diversified loans, DSCR requirements
Smart Contract	Contract vulnerabilities	Audited code, bug bounties
Liquidity	Can't exit immediately	7-day cooldown, plan ahead
Market	USDC depeg, rate changes	Stablecoin backed

Risk Indicators

Watch for these warning signs:

• ⚠️ High default rate (>5%)

• ⚠️ Low utilization (<20%)

• ⚠️ Rapidly increasing rates

Best Practices

Diversification

Don't put all capital in one pool:

• Spread across pool types

• Consider different risk levels

• Balance yield vs. safety

Due Diligence

Before staking:

• ✅ Review pool parameters

• ✅ Check historical performance

• ✅ Understand the borrower types

• ✅ Read pool documentation

Active Management

Monitor your positions:

• Check portfolio weekly

• Review pool updates

• Adjust allocations as needed

FAQ

How often are yields distributed?

Yields accrue continuously as borrowers make payments. Your share value updates in real-time.

Can I lose my principal?

Yes, if loans default and recoveries don't cover losses. Diversification helps mitigate this risk.

What happens if a pool is paused?

You can still unstake from paused pools. No new stakes or loans are accepted until resumed.

Are returns guaranteed?

No. Returns depend on borrower payments. Historical performance doesn't guarantee future results.

How are rates determined?

Pool managers set base parameters. Actual rates adjust based on borrower DSCR scores.

Next Steps

• Staking Guide - Detailed staking mechanics

• Portfolio Management - Managing your investments

• Understanding Pools - Deep dive into pool mechanics

Need Help?

• Discord: discord.gg/locale

• Email: [email protected]

• FAQ: docs.locale.cash/faq