CTOKEN

CTOKEN is a label used in blockchain finance to describe a class of interest-bearing tokens that represent a user's claim on a pool of assets within a lending or liquidity protocol. When a user deposits an underlying asset into the protocol, CTOKEN is minted and issued to the user; the user can later redeem CTOKEN to withdraw the underlying asset plus accrued interest. The tokens are typically fungible and transferable, enabling them to be traded, collateralized, or used within other DeFi protocols.

Most CTOKEN implementations are designed as tokenized representations on smart contract platforms, commonly following a standard such as ERC-20 on Ethereum or its equivalents on other chains. The value of a CTOKEN is not equivalent to a fixed amount of the underlying asset; instead, it is governed by an exchange rate: each CTOKEN can be redeemed for a varying amount of the underlying asset depending on pool size and interest accrual. As borrowers repay and interest accrues, the exchange rate tends to increase, allowing the CTOKEN holder to withdraw more underlying asset per token over time.

CTOKENs enable liquidity, composability, and programmatic yield generation within decentralized finance (DeFi). They are used to move value between contracts without needing to unwrap deposits. Security relies on the underlying smart contract code, price oracles, and pool liquidity; risks include bugs, oracle failures, and liquidity shocks.

In some ecosystems, similar assets are referred to as cTokens or CTokens, with specific features varying by protocol.