At tinlake.centrifuge.io, under “Assets” for each pool, average financing fees, eg, 13.1% for Gig Economy, are paid by whom (I assume the AO), to whom (lawyers etc?) and from what funds? What is their impact, including on APY? And what role do they play in assessment of which pool to invest in?
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Hey @Blahar, the financing fee is basically what % interest (in APR terms) the asset originator is borrowing DAI at. So GIG Pool pays 13.1% interest (compounded per second) for an asset with a financing fee of 13.1%. This goes to DROP and TIN investors in the pool (so just the investors, not lawyers / etc).
How these affect the APY of DROP and TIN comes down to, in very very simplified terms, DROP tranche gets a more stable, lower rate (i.e. 30 day rate of 7.34% for GIG Pool) whereas the TIN tranche, which takes first losses in the event of a default, earn a higher, variable rate. This higher, variable rate can be affected by the financing fee, i.e. an asset in a riskier risk group will have a higher financing fee, which means higher returns for TIN holders.
If you want to dive in more to the numbers, def be sure to visit the Tinlake documentation: https://docs.centrifuge.io/learn/terms/
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