# 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.

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