pTokens, also known as Bucket Liquidity (BL) tokens, are interest-bearing tokens that are minted upon deposit and burned upon withdrawal of the Lender's funds. Lenders receive pTokens in exchange for providing liquidity to the Bucket. Each Bucket has its own unique pToken.

The value of pTokens is pegged to the value of the corresponding asset. Interest collected by the BL tokens is continuously added to the pToken holders' wallet balance, allowing them to earn rewards by simply holding these tokens. Users can check their increased balances at any time.

pTokens are ERC-20 tokens backed by corresponding assets, which means they can be traded in other protocols, used as collateral, and transferred. This gives Lenders greater flexibility. The concept of interest-bearing tokens has been successfully employed in many DeFi protocols.