# BITS the Canonical Bitcoin Yield Layer The Bits Protocol is a decentralized liquid staking solution designed specifically for Bitcoin (BTC) and its wrapped variants (e.g., wBTC). By leveraging the Core Network's Dual Staking mechanism, Bits enables BTC holders to earn yield on their assets without exposing them to slashing risks. This protocol follows a Lido-inspired model, where staked assets generate rewards that are redistributed to holders, maintaining a 1:1 peg with BTC's price. The ecosystem includes the primary rebasing token (BITS), a wrapped version for DeFi integration (wBITS), and a forthcoming protocol token (qBITS). This documentation provides a comprehensive explanation of the protocol's components, mechanics, and user flows. # Liquid Staking for BTC Bits is a liquid staking protocol tailored for Bitcoin (BTC) and compatible wrapped BTC tokens, such as wBTC. It harnesses the Core Network's Dual Staking feature, which pairs BTC with CORE tokens to generate staking rewards, while requiring users to contribute only the BTC component. This innovative approach allows Bitcoin holders to actively participate in network staking and yield generation directly in BTC, without the need to lock up or transfer their assets to external networks in a way that compromises security or liquidity. The protocol operates on a Lido-style staking model, where daily rebasing ensures that the value of staked tokens remains aligned with the underlying BTC. Rewards accrued from staking are used to purchase additional BTC, which are then distributed proportionally as BITS tokens to all holders. Upon withdrawal, users can redeem their BITS for an increased amount of BTC, reflecting the earned yield. This mechanism preserves the upside potential of holding BTC, as the token maintains a consistent peg to BTC, enabling users to earn passive income without forgoing price appreciation. A key advantage of Bits is its risk profile: BTC staked within the Core Dual Staking system is not subject to slashing penalties, unlike many other staking protocols. This makes Bits an optimal choice for BTC holders seeking secure, high-yield opportunities while maintaining full control and liquidity over their assets.
# BITS Token BITS serves as the core rebasing token within the Bits Protocol, functioning as the liquid representation of staked BTC. When users deposit BTC, wBTC, or other accepted wrapped BTC variants into the protocol, an orchestrator smart contract mints an equivalent amount of BITS at a 1:1 ratio of the staked asset. The deposited BTC is then paired with CORE tokens sourced externally and allocated to the Core Dual Staking pool, where it begins accruing rewards. Staking rewards are collected daily and reinvested in BTC on the open market and distributing additional BITS tokens to existing token holders. As an ERC-20 compliant token, BITS is deployed to CoreDAO. However, cross-chain and DeFi applications such as lending, borrowing, or liquidity provision, users are recommended to convert their BITS to wBITS to avoid complications arising from the rebasing mechanism.
# wBITS Token ### wBITS Token wBITS is the wrapped variant of the BITS token, specifically engineered for users intending to leverage their staked assets within decentralized finance (DeFi) ecosystems. To obtain wBITS, users can wrap their BITS tokens directly through the Bits Protocol interface, receiving an equivalent amount in return. Unlike the rebasing BITS token, wBITS maintains a fixed supply while representing an underlying share of the total BITS pool. As BITS rebases daily to reflect Bitcoin yield, each wBITS token automatically becomes redeemable for an increasing amount of BITS over time. This share-based mechanism ensures that wBITS holders capture the full value of staking rewards without balance changes—the exchange rate between wBITS and BITS continuously appreciates. This design makes wBITS ideal for DeFi integration, enabling holders to provide liquidity on AMMs, collateralize loans, or engage in yield farming without sacrificing their underlying yield accrual. At any point, users can unwrap their wBITS back to BITS, realizing the accumulated value increase and initiating the unstaking process if desired. This flexibility makes wBITS an essential tool for bridging the gap between secure BTC staking and DeFi, without compromising on yield potential.
# qBITS Token qBITS is the native protocol token of the Bits ecosystem, designed to capture value from the platform's growth and governance features. While detailed specifications are forthcoming, qBITS will derive its utility from protocol success metrics, governance participation, and potential ecosystem incentives. It is scheduled for release in 2026. # Staking ### **Staking Flow** The Bits Protocol offers a streamlined user experience for staking, wrapping, unwrapping, and unstaking assets. Below is a step-by-step guide to each process. #### Staking 1. Deposit Assets: Users bring BTC, wBTC, or other supported wrapped BTC variants to the Bits Protocol interface. 2. Initiate Staking: Select the "Stake" option and specify the amount to deposit. 3. Receive BITS: The protocol mints BITS tokens at a 1:1 conversion rate, providing immediate liquidity while the underlying assets begin earning rewards in the Core Dual Staking pool. This process allows users to convert idle BTC into yield-generating BITS without losing exposure to BTC's price movements.
# Wrapping #### Wrapping 1. Navigate to Wrap Page: Access the wrapping interface within the Bits Protocol. 2. Select Wrap Option: Choose to wrap your BITS tokens. 3. Specify Amount and Confirm: Enter the desired amount of BITS to wrap and confirm the transaction. 4. Receive wBITS: Obtain wBITS tokens, which can now be used in DeFi applications while continuing to accrue value from the underlying staking rewards. Wrapping enables seamless integration with external protocols, enhancing the utility of staked assets.
# Unwrapping 1. Navigate to Wrap Page: Return to the wrapping interface. 2. Toggle to Unwrap: Switch to the unwrap mode. 3. Specify Amount and Confirm: Input the amount of wBITS to unwrap and approve the transaction. 4. Receive BITS: Retrieve the equivalent BITS tokens, inclusive of any value appreciation from rebases. Unwrapping is a prerequisite for unstaking and allows users to realize gains before withdrawing to native BTC.
# Unstaking 1. Navigate to Stake Page: Go to the staking interface. 2. Select Unstake Option: Choose the amount of BITS to unstake. 3. Specify Preferences: Select the destination blockchain and preferred token variant (e.g., BTC or wBTC). 4. Join the Queue: Confirm your position in the unstaking queue and review the estimated processing time. 5. Complete Unstaking: Once the queue time elapses, return to the interface to burn your BITS tokens and claim the corresponding BTC back into your wallet. This flow ensures a secure and transparent redemption process, with all steps verifiable on-chain.
# Unstaking Queue ### Mechanics and Functionality The unstaking queue in the Bits Protocol is a transparent mechanism designed to manage withdrawals efficiently while maintaining the integrity of the staking pool. Upon deposit, the protocol ladders the lock-up periods for each contribution, distributing unlocks across days. This staggered approach ensures a consistent flow of available liquidity, preventing sudden outflows that could disrupt the system. When multiple users initiate unstaking simultaneously, requests are processed in a first-in, first-out (FIFO) queue. Depending on demand and the volume of unlocking assets, processing may take from a few hours to several days. Users can visualize the queue in real-time through the protocol's interface, providing clear expectations on timelines. This system emphasizes accountability by handling all operations with real assets on-chain, eliminating opacity and ensuring that unstaking is backed by actual BTC liquidity. By monitoring the queue, users gain insights into network activity and can plan their withdrawals accordingly, fostering trust and predictability in the protocol.
# Security and Custody The Bits Protocol prioritizes security and custody to ensure user assets remain protected. Every BITS token is backed 1:1 by verifiable Bitcoin deposits, stored either in secure vaults on the Bitcoin mainnet or in audited smart contracts for wrapped tokens like wBTC and cbBTC. Assets are not rehypothecated, meaning they are not reused for other purposes or exposed to additional risks. Yield is generated through the Core Network's Dual Staking, which avoids slashing penalties and preserves the principal under various conditions. A multichain orchestrator handles deposits and redemptions across networks, ensuring accurate token issuance and preventing duplicates. All operations are on-chain, transparent, and auditable, with proof of reserves available at every step.
# Validator Infrastructure Bits utilizes the Core Network's validator system for reliable yield generation. Deposited BTC is paired with CORE delegations in the Dual Staking model, boosting returns without introducing slashing risks. This setup protects against validator downtime or errors, maintaining consistent performance regardless of market fluctuations.
# Custody Architecture Custody in Bits maintains a direct link to Bitcoin, avoiding derivative strategies or asset reuse. All collateral is transparent, auditable, and recoverable via on-chain rules. * Native BTC Vaults: Deposits on the Bitcoin mainnet are held in time-locked or secure vault addresses, with clear proof of reserves for visibility. * Smart Contract Custody for Wrapped Assets: Tokens like wBTC and cbBTC are stored in audited smart contracts, where minting and redemption follow immutable code. * Multichain Orchestration: The orchestrator verifies deposits and redemptions across chains, issuing tokens only after collateral confirmation and ensuring burned tokens release the equivalent BTC. This structure enforces 1:1 collateralization for all BITS tokens, combining Bitcoin's security with audited processes and proof-of-reserves to build user confidence in yield-bearing BTC staking.
# Roadmap and Future Development The Bits Protocol launches with single-sided BTC staking: users deposit only BTC (or wrapped variants), which is paired with externally sourced CORE tokens to participate in Core Network’s Dual Staking. This streamlined entry point enables Bitcoin holders to earn yield immediately without managing the CORE side. At public launch, Bits will introduce single-sided CORE staking as a parallel option. Users can deposit CORE tokens independently, which are then paired with BTC from the existing pool. Incentives from Dual Staking rewards are dynamically allocated based on real-time supply balance: * If BTC and CORE are proportionally matched for optimal staking efficiency, rewards are distributed proportionally between BTC and CORE depositors. * If more CORE is needed to pair with available BTC, a larger share of yield is directed to CORE depositors to encourage participation. * If BTC becomes the limiting factor, incentives shift toward BTC depositors. This need-based, algorithmic reward distribution encourages the Dual Staking pool to remain balanced and operating at peak yield without requiring users to supply both assets simultaneously. Following successful implementation on Core, Bits will expand single-sided BTC and CORE staking across compatible ecosystems with dual-staking mechanisms. The BITS token remains the canonical, cross-chain representation of staked value. Yield is aggregated from all supported networks and distributed according to the same balance-driven incentive model, always optimizing for maximum efficiency and returns. As the protocol scales, its distribution and incentive engine will continuously adapt: monitoring supply ratios, adjusting reward weights, and routing capital across chains to maintain optimal Dual Staking utilization. This unified, self-balancing framework positions Bits as the go-to protocol for secure, yield-optimized Bitcoin participation, starting with Core, and growing into a multichain standard.


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