# How it Works

hBTC enables Bitcoin holders to earn **BTC-denominated yield** while retaining self-custody and the ability to redeem for **native Bitcoin**.

#### Deposit & Mint

Users deposit Bitcoin via the decentralized sBTC bridge and stake sBTC into the hBTC vault. In return, the vault mints **hBTC**, representing a proportional share of pooled assets and strategy exposure.

#### Yield Accrual

hBTC accrues yield daily through on-chain strategies, including basis capture and Bitcoin-native staking. Yield is automatically compounded and reflected in the **hBTC share price**. All strategy profits are ultimately converted back into Bitcoin.

#### Withdraw & Redeem

Users may redeem hBTC for sBTC or native Bitcoin, subject to protocol cooldowns and underlying chain settlement times defined by the sBTC bridge.

#### Risk Controls & Transparency

The protocol employs automated controls for leverage, delta exposure, and interest spread regimes. All material metrics, positions, and transactions are transparently displayed and independently verifiable on-chain.

Detailed explanations of capital flows, yield mechanics, risk controls, and accounting are available in the sections below:

<table data-view="cards"><thead><tr><th></th><th data-hidden data-type="image">Cover image (dark)</th><th data-hidden data-card-target data-type="content-ref"></th><th data-hidden data-card-cover data-type="image">Cover image</th><th data-hidden data-type="image">Cover image (dark)</th><th data-hidden data-card-cover-dark data-type="image">Cover image (dark)</th></tr></thead><tbody><tr><td>Flows</td><td><a href="broken-reference">Broken file</a></td><td><a href="how-it-works/flows">flows</a></td><td><a href="https://2201013687-files.gitbook.io/~/files/v0/b/gitbook-x-prod.appspot.com/o/spaces%2Fxp26OjT5H1o55M1QMDI4%2Fuploads%2FH8rloWLH3zCOplraWCKK%2FhBTC%20Flows%20-%20Light.png?alt=media&#x26;token=cffad2d2-85fb-4e99-b22e-72dfb581d490">hBTC Flows - Light.png</a></td><td><a href="broken-reference">Broken file</a></td><td><a href="https://2201013687-files.gitbook.io/~/files/v0/b/gitbook-x-prod.appspot.com/o/spaces%2Fxp26OjT5H1o55M1QMDI4%2Fuploads%2F7WX1SQrTVYs0iTWUo35i%2FhBTC%20Flows%20-%20Dark.png?alt=media&#x26;token=d1470bdf-4539-4e9b-b28e-93a47cfde3ca">hBTC Flows - Dark.png</a></td></tr><tr><td>Yield</td><td><a href="broken-reference">Broken file</a></td><td><a href="how-it-works/yield">yield</a></td><td><a href="https://2201013687-files.gitbook.io/~/files/v0/b/gitbook-x-prod.appspot.com/o/spaces%2Fxp26OjT5H1o55M1QMDI4%2Fuploads%2FhHx62iZIa3ZZpDtEE4ZJ%2FhBTC%20Yield%20-%20Light.png?alt=media&#x26;token=b4b11104-baef-45e3-bf6b-d62b53e85d0c">hBTC Yield - Light.png</a></td><td><a href="broken-reference">Broken file</a></td><td><a href="https://2201013687-files.gitbook.io/~/files/v0/b/gitbook-x-prod.appspot.com/o/spaces%2Fxp26OjT5H1o55M1QMDI4%2Fuploads%2FbZ9GbqMLUhZ7kqFPNsIy%2FhBTC%20Yield%20-%20Dark.png?alt=media&#x26;token=117070dc-153e-4bbe-8b8f-9d38ebfb0b4e">hBTC Yield - Dark.png</a></td></tr><tr><td>Liquidity</td><td><a href="broken-reference">Broken file</a></td><td><a href="how-it-works/liquidity">liquidity</a></td><td><a href="https://2201013687-files.gitbook.io/~/files/v0/b/gitbook-x-prod.appspot.com/o/spaces%2Fxp26OjT5H1o55M1QMDI4%2Fuploads%2FYi1nnJ7ngO7QzdmgUPjA%2FhBTC%20Liquidity%20-%20Light.png?alt=media&#x26;token=925c6f3c-12c1-4454-bf6d-d7d532944a82">hBTC Liquidity - Light.png</a></td><td><a href="broken-reference">Broken file</a></td><td><a href="https://2201013687-files.gitbook.io/~/files/v0/b/gitbook-x-prod.appspot.com/o/spaces%2Fxp26OjT5H1o55M1QMDI4%2Fuploads%2FddwVL2pGTgeACJKzn7RI%2FhBTC%20Liquidity%20-%20Dark.png?alt=media&#x26;token=a46eb62e-ac41-4bb3-b749-4eaced7226a3">hBTC Liquidity - Dark.png</a></td></tr><tr><td>Risk Controls</td><td><a href="broken-reference">Broken file</a></td><td><a href="how-it-works/risk-controls">risk-controls</a></td><td><a href="https://2201013687-files.gitbook.io/~/files/v0/b/gitbook-x-prod.appspot.com/o/spaces%2Fxp26OjT5H1o55M1QMDI4%2Fuploads%2FOFxyNUN3jU7w42KATrc4%2FhBTC%20Risk%20Controls%20-%20Light.png?alt=media&#x26;token=6defe1f6-5d4b-4483-9edd-0a6fa118dde1">hBTC Risk Controls - Light.png</a></td><td><a href="broken-reference">Broken file</a></td><td><a href="https://2201013687-files.gitbook.io/~/files/v0/b/gitbook-x-prod.appspot.com/o/spaces%2Fxp26OjT5H1o55M1QMDI4%2Fuploads%2F5dVBtHJQVHgdK0PxMT7D%2FhBTC%20Risk%20Controls%20-%20Dark.png?alt=media&#x26;token=693158e8-079f-4c26-9ba9-dc5c5a92a911">hBTC Risk Controls - Dark.png</a></td></tr><tr><td>Accounting</td><td><a href="broken-reference">Broken file</a></td><td><a href="how-it-works/accounting">accounting</a></td><td><a href="https://2201013687-files.gitbook.io/~/files/v0/b/gitbook-x-prod.appspot.com/o/spaces%2Fxp26OjT5H1o55M1QMDI4%2Fuploads%2Fj5pkj32GFYd0iqmDRI1h%2FhBTC%20Accounting%20-%20Light.png?alt=media&#x26;token=c64ff23b-0c07-4b01-ad70-e92d5fe249d8">hBTC Accounting - Light.png</a></td><td><a href="broken-reference">Broken file</a></td><td><a href="https://2201013687-files.gitbook.io/~/files/v0/b/gitbook-x-prod.appspot.com/o/spaces%2Fxp26OjT5H1o55M1QMDI4%2Fuploads%2F5rju5jHGXDAHYQFR19Ky%2FhBTC%20Accounting%20-%20Dark.png?alt=media&#x26;token=574f4cd7-39ac-453e-9b74-44c6264fad09">hBTC Accounting - Dark.png</a></td></tr><tr><td>Governance</td><td><a href="broken-reference">Broken file</a></td><td><a href="how-it-works/governance">governance</a></td><td><a href="https://2201013687-files.gitbook.io/~/files/v0/b/gitbook-x-prod.appspot.com/o/spaces%2Fxp26OjT5H1o55M1QMDI4%2Fuploads%2FovKZFOXB92l2tVLVf3WC%2FhBTC%20Governance%20-%20Light.png?alt=media&#x26;token=5b80ba9f-2f93-4730-9ee3-8dfadce609ac">hBTC Governance - Light.png</a></td><td><a href="broken-reference">Broken file</a></td><td><a href="https://2201013687-files.gitbook.io/~/files/v0/b/gitbook-x-prod.appspot.com/o/spaces%2Fxp26OjT5H1o55M1QMDI4%2Fuploads%2FkauRAcstcUUQUj615KwY%2FhBTC%20Governance%20-%20Dark.png?alt=media&#x26;token=f2e94d4a-9a95-4a62-83e0-18b6ed4a0e01">hBTC Governance - Dark.png</a></td></tr></tbody></table>