Users who deposit into a lending pool (see here) receive debt tokens in return. The following section sets out the exact mechanism through which these debt tokens appreciate in value.
<aside> 🔑 Pool value = Total liquidity in a lending pool
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Pool value is a sum of all available liquidity in the pool. Its value changes with certain events, for instance pool value increases as more deposits are made, as interest repayments are made and can decrease if under collateralised loans are written off. The following page breaks down how pool value changes and where the liquidity supporting its value is held.
<aside> 🔑 Debt token supply = Minted debt tokens - burnt debt tokens
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Each pool has a unique debt token (DT) see an example here. DTs can be minted, burnt or transfered. Because each pool is managed in separate contracts their supply and by extension values are independent of each other. For instance Burning/minting of DT in one pool has no impact on DTs in another pool.
<aside> 🔑 Debt token price = Pool Value / Supply of Debt Tokens
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The price of a debt token increases as pool value grows and the supply of debt tokens remains constant. This would happen for instance as interest repayments are made on loans.