Understanding stBTC

Discover what stBTC is and how it works as a non-rebasing token that represents your staked Bitcoin position. This page explains the technology behind stBTC, how it differs from other staking tokens,

What is stBTC?

stBTC is a non-rebasing wrapped token that represents staked Bitcoin in the Bitcoin Yield protocol. Unlike traditional staking tokens that increase in quantity as rewards accumulate, stBTC maintains a fixed token count while increasing in value relative to Bitcoin over time.

When you deposit Bitcoin into Bitcoin Yield, you receive stBTC tokens that serve as a receipt for your deposit. As the protocol generates yield from transaction fees on the Botanix network, each stBTC token becomes worth more than 1 BTC as rewards are being distributed per stBTC token.

How stBTC Works

The stBTC token follows a value-accruing model rather than a rebasing model. Here's what this means:

• Fixed Token Balance: The number of stBTC tokens in your wallet remains constant

• Increasing Token Value: Each token grows in value relative to BTC as rewards accumulate

• Exchange Rate Mechanism: There's a dynamic exchange rate between stBTC and BTC that updates as yield accrues

For example, if you initially deposit 1 BTC and receive 1 stBTC, after a period of yield generation, that 1 stBTC might be worth 1.05 BTC when you withdraw. This design makes stBTC more compatible with various DeFi applications compared to rebasing tokens.

The Technology Behind stBTC

Botanix's stBTC is based on the EIP-4626 tokenized vault standard, which has been extensively battle-tested in the Ethereum ecosystem. This standard provides a unified interface for yield-bearing vaults, making stBTC more interoperable with other DeFi protocols.

The design is inspired by Lido's wstETH (wrapped staked ETH) product, which has proven to be a successful model for representing staked assets in a DeFi-compatible format.

Why Does stBTC Exist?

stBTC serves multiple important purposes:

1. Network Security: The Spiderchain (the technology behind Botanix) is a proof-of-stake protocol where staked Bitcoin secures the network. stBTC represents participation in this security mechanism. (While staking and slashing mechanisms aren't yet fully activated, the current implementation lays the groundwork for the network's long-term security model.)

2. User-Friendly Yield: stBTC provides a straightforward way for Bitcoin holders to earn passive income on their holdings.

3. DeFi Compatibility: The non-rebasing design of stBTC makes it compatible with various DeFi protocols and applications, unlike rebasing tokens that can cause issues with many smart contracts.

4. Market Signaling: While staking and slashing mechanisms are not yet fully active on the network, the stBTC product signals to the market and Botanix participants the longer-term security model of the Botanix network.

stBTC vs. Other Staking Tokens

stBTC differs from many other staking tokens in several key ways:

Feature	stBTC	Rebasing Tokens	Traditional Wrapped Tokens
Value Accrual	Increases in value per token	Increases in token quantity	Fixed 1:1 peg
Balance Changes	Fixed token count	Token count increases	Fixed token count
DeFi Compatibility	High	Low	High
Accounting Simplicity	High	Low	Medium
Transaction Gas Costs	Lower	Higher	Lower

This design makes stBTC particularly well-suited for integration with other financial applications, as it behaves like a standard ERC-20 token while still representing your staked Bitcoin position plus earned yield.

By understanding how stBTC works, you can better appreciate its utility both as a yield-bearing asset and as a key component in the Botanix ecosystem.