Interest-Bearing & Default Account State

Interest-bearing Token-2022 mints accrue yield over time via an on-chain rate mechanism. Default account state sets whether new token accounts start initialized or frozen, gating who can receive transfers until thawed.

Recipe

# Interest-bearing mint. The rate is given in basis points by --interest-rate;
# there is no --enable-interest-bearing or --rate-authority flag. The rate
# authority defaults to the mint authority (change it later with
# `spl-token authorize <MINT> interest-rate <PUBKEY>`).
spl-token create-token \
  --program-id TokenzQdBNbLqP5VEhdkAS6EPFLC1PHnBqCXEpPxuEb \
  --decimals 6 \
  --interest-rate 500
 
# Default frozen new accounts. This REQUIRES a freeze authority, so
# --enable-freeze must be passed in the same command or mint creation fails.
spl-token create-token \
  --program-id TokenzQdBNbLqP5VEhdkAS6EPFLC1PHnBqCXEpPxuEb \
  --enable-freeze \
  --default-account-state frozen

When to reach for this:

On-chain savings-style products displaying APY
Compliance tokens requiring KYC thaw before transfers
Airdrops that recipients must claim via thaw flow
Treasury tokens accruing nominal yield without external lending program

Working Example

# Create interest-bearing mint at 5.00% (500 basis points)
MINT=$(spl-token create-token \
  --program-id TokenzQdBNbLqP5VEhdkAS6EPFLC1PHnBqCXEpPxuEb \
  --decimals 6 \
  --interest-rate 500 | awk '/Creating token/{print $3}')
 
spl-token display "$MINT" --program-id TokenzQdBNbLqP5VEhdkAS6EPFLC1PHnBqCXEpPxuEb

use anchor_lang::prelude::*;
use anchor_spl::token_interface::{Mint, TokenAccount, TokenInterface};
 
#[derive(Accounts)]
pub struct ThawAfterKyc<'info> {
    pub mint: InterfaceAccount<'info, Mint>,
    #[account(mut)]
    pub holder_token: InterfaceAccount<'info, TokenAccount>,
    pub freeze_authority: Signer<'info>,
    pub token_program: Interface<'info, TokenInterface>,
}
 
pub fn thaw_after_kyc(ctx: Context<ThawAfterKyc>) -> Result<()> {
    // CPI ThawAccount after off-chain KYC verification
    Ok(())
}

// UI: read interest rate from mint extension; show accrued balance estimate
// Note: displayed yield may use timestamp-based calculation client-side

What this demonstrates:

Interest rate authority can update APY parameters per extension rules
Default frozen state blocks transfers until ThawAccount by freeze authority
New ATAs inherit default state at creation time

Deep Dive

How It Works

Interest-bearing: the rate lives in the mint extension and affects the UI amount only. The stored amount is unchanged and no new tokens are minted - Token-2022 applies continuous compounding when converting raw units to a UI amount (amount_to_ui_amount). Total supply does not grow, so this cannot fund redemptions on its own
Default account state: Initialized (normal) or Frozen for new accounts
Freeze authority required to thaw gated accounts
Wallets must call refresh/update instructions where required by spec

Extension Comparison

Extension	Affects	Authority
Interest-bearing	UI amount only (raw `amount` unchanged)	Rate authority
Default account state	New account transfers	Freeze authority

TypeScript Notes

// Before transfer: check account state via jsonParsed RPC
// if (state === "frozen") prompt user to complete KYC thaw flow

Gotchas

APY display without refresh - stale UI amounts. Fix: follow Token-2022 refresh instruction cadence in clients.
Frozen airdrop surprise - users cannot move tokens. Fix: document claim + thaw steps upfront.
Freeze authority centralization - issuer can lock all holders. Fix: multisig freeze authority or revoke after distribution.
Interest vs DeFi yield - extension accrual differs from lending protocol APY. Fix: do not conflate in marketing.
DEX pools with frozen default - pool ATAs may need explicit thaw at setup. Fix: test pool creation flow end-to-end.

Alternatives

Alternative	Use When	Don't Use When
External lending protocol	Real yield from borrowers	Simple branded savings UX
Transfer hook KYC	Per-transfer checks	Account-level gating sufficient
Manual freeze per account	Selective lock	All new accounts should start frozen

FAQs

What is interest-bearing extension?

An on-mint rate that Token-2022 applies when converting raw units to a UI amount. Nothing is minted and the stored amount never changes - it is a display/accounting convention, not real yield.

What is default account state?

Whether newly created token accounts for the mint start initialized or frozen.

Who thaws frozen accounts?

Freeze authority via ThawAccount instruction after your KYC policy passes.

Can interest rate change?

Rate authority updates per extension rules - document governance.

Do all wallets show accrued interest?

Support varies - you may need custom UI calculations.

Compatible with transfer fees?

Yes with careful UX - fees apply on transfers, interest accrues separately.

Can default state be initialized?

Yes - standard behavior equivalent to classic SPL accounts.

Impact on AMMs?

Frozen accounts cannot transfer - pools must use initialized/thawed accounts.

Is this real DeFi yield?

Extension math only - not lending market yield unless integrated off-chain.

Testing on devnet?

Create extension mint on devnet; verify thaw and transfer gating paths.

Immutable default state?

Often set at mint init - plan before mainnet.

Relation to freeze authority?

Default frozen requires active freeze authority to thaw - same as classic freeze.

Authorities - freeze authority
Permanent Delegate & Non-Transferable - control extensions
Token-2022 Best Practices - gating UX

Stack versions: This page was written for Agave 4.1.1, Solana CLI 3.0.10, Anchor 0.32.1, anchor-lang 0.32.1, Rust 1.91.1, @solana/kit 7.0.0, Surfpool 0.12.0, and LiteSVM 0.6.x.

Recipe

# Interest-bearing mint. The rate is given in basis points by --interest-rate;
# there is no --enable-interest-bearing or --rate-authority flag. The rate
# authority defaults to the mint authority (change it later with
# `spl-token authorize <MINT> interest-rate <PUBKEY>`).
spl-token create-token \
  --program-id TokenzQdBNbLqP5VEhdkAS6EPFLC1PHnBqCXEpPxuEb \
  --decimals 6 \
  --interest-rate 500
 
# Default frozen new accounts. This REQUIRES a freeze authority, so
# --enable-freeze must be passed in the same command or mint creation fails.
spl-token create-token \
  --program-id TokenzQdBNbLqP5VEhdkAS6EPFLC1PHnBqCXEpPxuEb \
  --enable-freeze \
  --default-account-state frozen

When to reach for this:

On-chain savings-style products displaying APY
Compliance tokens requiring KYC thaw before transfers
Airdrops that recipients must claim via thaw flow
Treasury tokens accruing nominal yield without external lending program

Working Example

# Create interest-bearing mint at 5.00% (500 basis points)
MINT=$(spl-token create-token \
  --program-id TokenzQdBNbLqP5VEhdkAS6EPFLC1PHnBqCXEpPxuEb \
  --decimals 6 \
  --interest-rate 500 | awk '/Creating token/{print $3}')
 
spl-token display "$MINT" --program-id TokenzQdBNbLqP5VEhdkAS6EPFLC1PHnBqCXEpPxuEb

use anchor_lang::prelude::*;
use anchor_spl::token_interface::{Mint, TokenAccount, TokenInterface};
 
#[derive(Accounts)]
pub struct ThawAfterKyc<'info> {
    pub mint: InterfaceAccount<'info, Mint>,
    #[account(mut)]
    pub holder_token: InterfaceAccount<'info, TokenAccount>,
    pub freeze_authority: Signer<'info>,
    pub token_program: Interface<'info, TokenInterface>,
}
 
pub fn thaw_after_kyc(ctx: Context<ThawAfterKyc>) -> Result<()> {
    // CPI ThawAccount after off-chain KYC verification
    Ok(())
}

// UI: read interest rate from mint extension; show accrued balance estimate
// Note: displayed yield may use timestamp-based calculation client-side

What this demonstrates:

Interest rate authority can update APY parameters per extension rules
Default frozen state blocks transfers until ThawAccount by freeze authority
New ATAs inherit default state at creation time

Deep Dive

How It Works

Interest-bearing: the rate lives in the mint extension and affects the UI amount only. The stored amount is unchanged and no new tokens are minted - Token-2022 applies continuous compounding when converting raw units to a UI amount (amount_to_ui_amount). Total supply does not grow, so this cannot fund redemptions on its own
Default account state: Initialized (normal) or Frozen for new accounts
Freeze authority required to thaw gated accounts
Wallets must call refresh/update instructions where required by spec

Extension Comparison

Extension	Affects	Authority
Interest-bearing	UI amount only (raw `amount` unchanged)	Rate authority
Default account state	New account transfers	Freeze authority

TypeScript Notes

// Before transfer: check account state via jsonParsed RPC
// if (state === "frozen") prompt user to complete KYC thaw flow

Gotchas

APY display without refresh - stale UI amounts. Fix: follow Token-2022 refresh instruction cadence in clients.
Frozen airdrop surprise - users cannot move tokens. Fix: document claim + thaw steps upfront.
Freeze authority centralization - issuer can lock all holders. Fix: multisig freeze authority or revoke after distribution.
Interest vs DeFi yield - extension accrual differs from lending protocol APY. Fix: do not conflate in marketing.
DEX pools with frozen default - pool ATAs may need explicit thaw at setup. Fix: test pool creation flow end-to-end.

Alternatives

Alternative	Use When	Don't Use When
External lending protocol	Real yield from borrowers	Simple branded savings UX
Transfer hook KYC	Per-transfer checks	Account-level gating sufficient
Manual freeze per account	Selective lock	All new accounts should start frozen

FAQs

What is interest-bearing extension?

An on-mint rate that Token-2022 applies when converting raw units to a UI amount. Nothing is minted and the stored amount never changes - it is a display/accounting convention, not real yield.

What is default account state?

Whether newly created token accounts for the mint start initialized or frozen.

Who thaws frozen accounts?

Freeze authority via ThawAccount instruction after your KYC policy passes.

Can interest rate change?

Rate authority updates per extension rules - document governance.

Do all wallets show accrued interest?

Support varies - you may need custom UI calculations.

Compatible with transfer fees?

Yes with careful UX - fees apply on transfers, interest accrues separately.

Can default state be initialized?

Yes - standard behavior equivalent to classic SPL accounts.

Impact on AMMs?

Frozen accounts cannot transfer - pools must use initialized/thawed accounts.

Is this real DeFi yield?

Extension math only - not lending market yield unless integrated off-chain.

Testing on devnet?

Create extension mint on devnet; verify thaw and transfer gating paths.

Immutable default state?

Often set at mint init - plan before mainnet.

Relation to freeze authority?

Default frozen requires active freeze authority to thaw - same as classic freeze.

Authorities - freeze authority
Permanent Delegate & Non-Transferable - control extensions
Token-2022 Best Practices - gating UX

Stack versions: This page was written for Agave 4.1.1, Solana CLI 3.0.10, Anchor 0.32.1, anchor-lang 0.32.1, Rust 1.91.1, @solana/kit 7.0.0, Surfpool 0.12.0, and LiteSVM 0.6.x.

Interest-Bearing & Default Account State

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Interest-Bearing & Default Account State