How does Atoken automatically accure its value?

Question

Hey can anyone tell me how Aave atoken automatically accures its value?

Answer

Each borrowable asset has a `liquidityIndex`, which is constantly increasing at a rate determined by the amount of interest being paid by all borrowers. Every Aave aToken holder earns interest proportional to their share of the Aave pool, so their real-time balance is

```
scaledATokenBalance * liquidtyIndex
```

where

```
scaledATokenBalance = suppliedAmount / liquidityIndexAtTimeOfSupply
```

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How does Atoken automatically accure its value?

Answers 1