# SavingToken

## Description

SavingToken ('sToken') is an ERC20 deposit certificate that is minted by the user when he/she replenishes assets to DEFED. When a user withdraws assets from DEFED, the corresponding sToken needs to be burned.&#x20;

SToken is anchored at a ratio of 1:1 to the value of the corresponding original asset (for example: The value of 1 SETH is exactly equal to 1ETH and can be exchanged at any time via smart contracts), and can represent the revenue earned by the user through the deposition. Users can hold and transfer sToken assets without worry.&#x20;

In DEFED, all deposit proceeds are distributed directly to the corresponding asset holders by means of an increasing sToken balance.\\

## FAQ

### Q: How do I earn interest with sToken ? / How does the sToken balance increase?

A: The smart contract will update the current sToken balance as blocks are added; the result of the balance update will include the stored principal and the corresponding interest rate. The interest rate will be calculated automatically based on the current lending pool utilization and will be synchronized when the utilization rate changes.\\

### Q: Can I transfer sToken?

A: Yes, but you should know that:

The value of the SToken is fully anchored to the corresponding asset at a ratio of 1:1, therefore, the transfer of the sToken represents a loss of your equity, i.e., after the transfer of the sToken, you will not be able to withdraw the corresponding asset from DEFED.

Since the balance of sToken involves the calculation of health factor, a health factor below 1 will directly trigger the liquidation process. In order to control the risk, you cannot transfer your sToken when your health factor is equal to 1.\\
