# DebtToken

## Description

Debt tokens are tokens that represent debt and the corresponding interest. When a user borrows assets on DEFED, the corresponding DebtToken is minted, and when the user repays the borrowing, the corresponding DebtToken is burned.&#x20;

Similar to SavingToken, DebtToken is anchored at a 1:1 ratio to the value of the corresponding asset borrowed.\\

## FAQ

### Q: Can Debt Tokens be Transferred?

A: Debt tokens are not transferable.\\

### Q: How is the interest calculated?

A: Similar to the mechanism of SavingToken, DebtToken will automatically increase as blocks are added, in order to calculate interest on your debt, so your DebtToken balance will represent your debt + interest.

The rate of interest increase is also affected by the current lending pool's utilization rate, and is updated simultaneously when the utilization rate changes.
