Deposit tokens are digital assets representing a claim on underlying assets held within a decentralized finance protocol. When users supply liquidity or collateral to a DeFi platform, they receive these tokens as a receipt. These tokens can often be further used within other DeFi applications, enabling users to earn additional yields or participate in governance. They serve as proof of ownership for the deposited funds.
Context
In DeFi news, deposit tokens are central to discussions about liquidity provision, yield farming, and the composability of financial primitives across various protocols. Their role in allowing users to leverage their deposited assets for multiple purposes is a frequent topic. Understanding their functionality is essential for assessing risk and opportunity within the decentralized financial landscape.
J.P. Morgan's Kinexys unit is piloting a USD deposit token on a public blockchain to optimize institutional cash settlement and payment workflows, enhancing operational efficiency and liquidity management for enterprise clients.
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