Yield generation mechanism
A technical explanation of how Bitcoin Yield generates returns through transaction fees on the Botanix network. This page details the fee distribution system, compounding effects, and the connection t
Bitcoin Yield generates returns through a transparent and sustainable model that leverages transaction activity on the Botanix network.
Fee Distribution
Source of Yield: 50% of all gas fees from transaction activity on the Botanix network are directed to the staking protocol
Distribution Method: Fees are collected in BTC and distributed proportionally to stBTC holders
Continuous Accrual: Yield accumulates continuously as transactions occur on the network
Transparent Mechanism: All fee collection and distribution happens on-chain and can be verified
From Network Activity to Yield
Users pay gas fees in BTC for transactions on the Botanix network
The network automatically allocates 50% of these fees to the staking contract
As fees accumulate in the contract, the value of stBTC relative to BTC increases
This increased value is realized when stBTC is redeemed for BTC
Yield Compounding
The yield in Bitcoin Yield compounds automatically:
As new fees enter the staking pool, they increase the BTC backing of all stBTC tokens
This means future yields are calculated on both your initial deposit and previously accrued rewards
The compounding effect leads to greater returns over longer staking periods
Proof-of-Stake Integration
While currently the yield comes solely from transaction fees, the future design includes:
Integration with the Spiderchain's full proof-of-stake consensus
Additional rewards for securing the network
Potential slashing conditions to ensure network security
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