# 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.

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