As the name implies, decentralized stock tokens (or dTokens) are created decentrally, which in this case will be DeFiChain users. Every single user is able to mint (or create) a decentralized token themselves.

The prerequisite for creating a decentralized token on the DeFiChain blockchain is the deposit of collateral. This collateral can be in the form of DFI, BTC or the stablecoins USDT or USDC and held in a Vault. At least half of the collateral must be in the form of DFI, the rest can be in any of the aforementioned coins. Decentralized loan tokens on DeFiChain are not securities, but are backed by cryptocurrencies such as DFI, BTC, etc.

This collateralisation also ensures that decentralized loans and decentralized stock tokens cannot be created out of thin air, and are therefore always collateralised with a higher US dollar equivalent than the sum of all issued tokens combined. This over-collateralisation of at least 200% is an essential part of how a Vault works and guarantees that each decentralized token is backed by an actual value in the form of cryptocurrencies.

However, in order to be able to map a fully comprehensive and functioning financial ecosystem on DeFiChain, interest needs to be introduced. Interest rates depend on the collateralisation ratio: If you put a relatively large amount of asset tokens in your Vault and only use a small part of it to mint a decentralized token, then you pay less interest than if you were to use a relatively large amount of your collateral to mint decentralized tokens and stay just above the minimum collateralisation ratio of 200%. The same principle is also used by traditional banks: For example, if you take out a loan on your house, you pay either more or less interest depending on the loan value in relation to the value of your house.