The Interest-Bearing extension is a Token-2022 module that configures a token to automatically accrue interest over time at a set annual rate. Holders' UI balances grow continuously without any transactions — the interest is calculated based on elapsed time.

Interest is applied as a display-only transformation — the underlying raw token balance does not change. When a holder transfers or redeems tokens, the contract calculates the accrued amount and adjusts accordingly.

Interest-bearing tokens are used for yield-bearing stablecoins, synthetic assets, and other instruments where an automatic accrual mechanism is needed. The interest rate can be updated by the rate authority if the token has a mutable rate configuration.