> For the complete documentation index, see [llms.txt](https://docs.bits.financial/llms.txt). Markdown versions of documentation pages are available by appending `.md` to page URLs; this page is available as [Markdown](https://docs.bits.financial/protocol-overview/custody-architecture.md).

# 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.

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