> For the complete documentation index, see [llms.txt](https://docs.hermetica.fi/llms.txt). Markdown versions of documentation pages are available by appending `.md` to page URLs; this page is available as [Markdown](https://docs.hermetica.fi/hbtc/how-it-works/flows.md).

# Flows

## Capital Flows

<figure><img src="/files/pns97DrfHPsICMSI6uIM" alt=""><figcaption></figcaption></figure>

### 1) Deposit: mint hBTC

Users deposit **native** **BTC** or **sBTC** into the vault smart contract and receive **hBTC** based on the current share price. hBTC is a SIP-010 token whose value reflects the vault’s net asset value (NAV) per share.&#x20;

Deposits from BTC take **\~30 min** (3 Bitcoin confirmations).

{% hint style="success" %}

### **sBTC** Decentralized Bitcoin Bridge

sBTC is a 1:1 BTC-backed asset that enables **permissionless deposit and withdrawal** of Bitcoin into the Stacks ecosystem. It is secured by a **decentralized network of signers**, with deposits and withdrawals requiring a 70% supermajority consensus (10 of 14 signers).\
\
\&#xNAN;*For additional details, see the* [*sBTC documentation*](https://docs.stacks.co/learn/sbtc)*.*
{% endhint %}

### 2) Deploy: generate BTC-denominated yield

Deposited BTC (sBTC) is deployed into DeFi to generate BTC-denominated yield. \
\
The primary strategy at launch is to borrow stablecoin assets against sBTC collateral (e.g., borrow USDh on Zest), deploy stablecoins into yield protocols (e.g., stake USDh on Hermetica), and harvest profits back into sBTC via swap.&#x20;

{% hint style="info" %}

## External Integrations

At launch, hBTC integrates with the following external smart contracts:

1. **Zest Protocol** – used to borrow against sBTC collateral as part of the vault’s core strategy.\
   \&#xNAN;*For additional details, see the* [*Zest documentation*](https://docs.zestprotocol.com/start/)*.*
2. **Hermetica Protocol** – used for sUSDh yield generation and stablecoin-to-Bitcoin swap execution.\
   \&#xNAN;*For additional details, see the* [*USDh documentation*](https://docs.hermetica.fi/usdh)*.*
   {% endhint %}

### 3) Account: daily mark-to-market and share price update

The vault performs **daily** mark-to-market accounting via a reward logging mechanism, which updates the hBTC share price accordingly.

{% hint style="success" %}

## **Reserve Fund**

A dedicated **reserve fund** can buffer negative reward periods (subject to capitalization).&#x20;

*For additional details, see the* [*Reserve Fund documentation*](https://docs.hermetica.fi/hbtc/reserve-fund)*.*
{% endhint %}

### 4) Withdraw: redeem hBTC to BTC

Users may withdraw at any time without lockups. Withdrawals are initiated by returning hBTC to the vault and, after the cooldown period, redeemed for either native BTC or sBTC. An **express** withdrawal path is available in exchange for a fee.

Withdrawals to BTC take **\~80 min** (8 Bitcoin confirmations).


---

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