Introduction

The Solana Foundation introduced Interest-Bearing Tokens (IBTs) in its Token 2022 Program, enabling tokens to accrue interest in real-time. This feature allows developers to create a range of on-chain financial instruments, such as bonds and yield-bearing stablecoins, with the security and flexibility of traditional finance.

Key Features

Seamless Compounding
IBTs accrue interest seamlessly, based on Solana’s network timestamp, allowing passive growth in token value.

Stable Supply Integrity
Interest is reflected visually in the displayed amount without minting new tokens, preserving a stable token supply.

Streamlined Calculation
A simplified model ensures developers avoid complex token updates, with interest displayed as a clean UI adjustment.

Amount vs UI Amount

Because Interest-Bearing Tokens (IBTs) accumulate interest, users may initially feel they receive less sUSD than their deposited USDC. However, there’s no need for concern. The sUSD balance displayed across supported dApps and infrastructure reflects the full amount, including accrued interest. 

Here’s how IBTs work:

Amount
This is the absolute token quantity recorded on-chain, remaining constant unless a transaction occurs.

UI Amount
This represents the current interest-adjusted value, maintaining the sUSD 1:1 peg with USD. While the absolute amount stays fixed, the UI amount gradually increases to reflect interest.

As of November 1, 2024, the effective value of sUSD is calculated with a scale factor applied to the absolute amount. Currently set at 1.07958189, this scale factor adjusts over time to incorporate accrued interest, providing users with a real-time balance update.

Users can view this scale-adjusted balance on platforms like Solayer and Phantom, while Solscan displays only the absolute amount, which may cause minor discrepancies. The sUSD page shows this scale-adjusted amount for all transactions, ensuring a seamless 1:1 USD peg without the need for manual calculations.

Note: Some dApps or platforms that do not fully support IBTs may display only the absolute sUSD balance rather than the scale-adjusted balance. Solayer is working with the Solana Foundation to encourage broader adoption of the IBT standard across various dApps.

IBTs Tech Guide

For those curious about exploring new developments with Interest-Bearing Tokens (IBTs) or diving deeper into their technical structure, here are key resources that provide insight into the concept, implementation, and practical uses of IBTs within the Solana Token 2022 program:

Solana Developer Guide: Interest-Bearing Tokens

This guide introduces IBTs, explaining how they allow token holders to automatically accumulate interest without additional steps. It emphasizes IBTs as tools for creating stable returns within DeFi projects and their value in issuing and managing specific financial products.

Solana Developer Course: Interest-Bearing Tokens

This hands-on course walks developers through the setup and implementation of IBTs, covering how interest accrues and how a token’s value grows over time. It also shows how IBTs update UI components to reflect earned interest, providing developers with a practical guide to creating tokens that increase in real-time value on the blockchain.

Solana SPL Token 2022 Extensions: Interest-Bearing Tokens

This document dives into the technical details of IBTs within Solana’s SPL (Solana Program Library) Token 2022 extensions, explaining the interest accrual mechanism and on-chain handling of records. It also highlights how IBTs maintain a stable token supply while reflecting interest growth through UI adjustments, ensuring a clear distinction between visual representation and on-chain records.

Use Cases

Interest-bearing tokens bring flexibility to blockchain finance, opening up numerous applications.

On-Chain Bonds
Allow users to earn steady returns, simulating bond mechanics.

Staking Tokens
Support staking models that automatically reflect interest on token balances.

Yield-Bearing Stablecoins
Provide stablecoin solutions that accumulate interest over time, enhancing their utility.

Advantages

Customizable
Developers can set unique parameters to match project needs, easily configuring interest rates and update frequencies.

Simplified Development
With native support, the feature abstracts complex calculations, enabling developers to focus on functionality rather than repetitive calculations.

Secure Integration
Integrated directly within Solana’s protocol, IBTs benefit from Solana’s robust security, eliminating the need for additional smart contract layers.

Performance
Solana’s high-performance network supports seamless transactions and high-frequency interest updates.

Cost-Efficiency
Solana’s low transaction fees make it economically viable to manage token interest on-chain.

Conclusion

Interest-Bearing Tokens in Solana’s Token 2022 Program stand as a significant leap toward integrating traditional finance principles with blockchain technology. They offer developers a streamlined approach to creating versatile and efficient financial products that cater to both DeFi enthusiasts and institutional investors. As the adoption of blockchain in finance grows, IBTs highlight Solana’s commitment to pushing the boundaries of what’s possible in decentralized finance.