Yes, that's what happens. You can specify how much and for how long and at what interest rate you want to lend. So, I'm lending out 1BTC for 0.01% interest a day for 2 days just to test drive it. This might be helpful. I'm happy to let you know in two days time how it went before you set up an account.
when you lend to it what is being done with it? Are other people margin trading with it or what? I don't have an account at Bitfinex
Yes, that's what happens. You can specify how much and for how long and at what interest rate you want to lend. So, I'm lending out 1BTC for 0.01% interest a day for 2 days just to test drive it. This might be helpful. I'm happy to let you know in two days time how it went before you set up an account.