eToken is a vault token that is like a deposit receipt. It represents your share in the vault. The eToken is also the interest bearing token which will accumulate the yield earned from the strategy. There is an exchange rate between eToken and underlying token in the vault.
The exchange rate will rise only because of interests accrued. When users deposit the asset into the vault, they will receive eToken. Once they withdraw from the vault, their eToken will be burned. eTokens are fungible tokens on each blockchain that means users can transfer and trade them.
For example, assume that the exchange rate is 1:1.1 for eUSDT to USDT when you are depositing. if you deposit 110 USDT to the vault, you will receive 100 eUSDT in return. With the yield accrued, when you are withdrawing your USDT, the exchange rate rises to 1:1.2. Then you can get back 120 USDT and your eUSDT will be burned.