Definition ∞ Debt tokens are digital assets representing a loan or debt obligation recorded on a blockchain. These tokens function as a verifiable claim against a borrower, often offering interest payments or other forms of yield to the holder. They enable the securitization and fractionalization of debt, allowing for greater liquidity and accessibility in lending markets. Such tokens can represent traditional debt instruments or novel decentralized loan agreements.
Context ∞ The issuance and trading of debt tokens are gaining traction in decentralized finance and real-world asset tokenization news. Discussions often address the legal enforceability of on-chain debt, the mechanisms for interest distribution, and risk assessment for tokenized loans. Future developments include the expansion of tokenized credit markets, the integration of debt tokens into broader financial portfolios, and regulatory clarity around their classification.
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