A user can deposit assets into Flux to mint fTokens, ERC-20 tokens representing balances on the protocol. Some deposited assets are lendable by the protocol, and earn the user interest in return.
For example, a user can deposit USDC into Flux to mint fUSDC. By doing so, the user's USDC will become available to borrowers, and the user will earn the USDC supply rate.
Lenders earn interest by minting fTokens. The interest earned by the protocol isn't distributed; instead, the exchange rate for fTokens changes, and users will be able to redeem more assets over time as interest is earned.
Borrowers use fTokens as collateral to borrow other assets. Collateral fTokens also earn interest, potentially offsetting some of the borrow costs.
fTokens are generally transferrable. However, fTokens respect the underlying asset's transfer restrictions for permissioned assets. Transfers that would result in negative account liquidity for borrowers will also fail.