1. Assume the USDC pool only had two deposits ever in its history, and these were made prior to any loans being issued. User A initially deposited $1m USDC and minted 200,000,000 debt tokens. User B initially deposited $1,000 USDC and minted 200,000 debt tokens.
2. Thus the total circulating supply of debt tokens is 200,200,000, the total pool value $1,001,000 and the debt token price is one debt token equal to $0.005 USDC.
3. User A decides they want to reduce their position. Specifically, they decided to burn half the the debt tokens in their wallet. Recall they hold 200,000,000 debt tokens. Half of this 100,000,000. This is equal to $500,000 USDC because 100,000,000 debt tokens * 0.005 debt token price = $0.5m.