Vault Tokens, or pTOKENs, are deposit receipts that represent your share in a Pit Finance Vault. When you deposit a token like SEI into a Vault, you receive a corresponding pTOKEN, such as pSEI, which reflects your stake in the pooled assets of that Vault.
As the Vault generates profits through its DeFi strategies, the value of your pTOKEN increases. For example, if you hold pSEI, and the SEI Vault earns rewards, the amount of underlying SEI your pSEI can be redeemed for grows. Over time, your pSEI becomes more valuable, giving you greater returns when you withdraw your assets.
In summary, Vault Tokens not only track your initial deposit but also capture the ongoing growth of the Vault, making them a key component of your investment in Pit Finance.
When a user withdraws liquidity from a Pit Vault, their corresponding pTOKEN will be burned. pTOKENs are standard Sei Network tokens, meaning they can be transferred and traded just like any other token on the Sei Network.
