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dxBTC Overview

Planned

dxBTC is planned and not live. It cannot be minted or bought today.

Yield-bearing BTC of Bitcoin L1​

dxBTC is a planned yield-generating synthetic Bitcoin asset, to be built on top of the SUBFROST ecosystem. It is designed to provide Bitcoin holders with a way to earn a sustainable yield on their assets in a trust-minimized and decentralized manner.

In practice, this will be the simplest possible way for a user to earn BTC yield with their BTC:

  1. User will sign a single Bitcoin transaction to stake their native BTC in the SUBFROST yield vault. The user will receive dxBTC, which will represent their staked BTC.
  2. Their BTC will be wrapped to frBTC and deployed into market-neutral LP strategies and over-collateralized lending protocols across Bitcoin L1, earning yield regardless of BTC price movement.
  3. This yield will then be passed back to stakers in the form of native BTC, which the user will be able to check at any time.
  4. User will sign a single Bitcoin transaction to unstake their native BTC and burn their dxBTC. dxBTC diagram

These yield vaults will be deployed across Alkanes, Arch, BRC 2.0, and any other programmable ecosystem that launches on Bitcoin mainnet.

This economic model is already proven on other blockchains like Ethereum and Solana and can be dramatically simplified for the end user.

How does it work? frBTC + Yield​

At its core, dxBTC will be an alkane that locks up frBTC. SUBFROST governance will then act as a decentralized strategist, deploying the locked frBTC into various conservative yield-generating strategies.

These strategies may include:

  • Providing liquidity to decentralized exchanges: The frBTC can be used to provide liquidity to delta-neutral LPs like frBTC/wBTC or other trading pairs on decentralized exchanges, earning trading fees.
  • Lending: The frBTC can be lent out on decentralized, over-collateralized lending platforms to earn interest.
  • Cross-chain Strategies: The frBTC can be trustlessly bridged to other blockchain ecosystems, like Hyperliquid, to participate in yield farming opportunities.

The profits generated from these strategies will then be distributed back to the dxBTC holders, allowing them to earn a passive income while maintaining full exposure to their BTC. This will provide a way for Bitcoin holders to put their assets to work without having to sell them or trust a centralized custodian.

The Role of SUBFROST Governance​

SUBFROST governance will play a crucial role in dxBTC. The governance will be responsible for:

  • Selecting and managing yield-generating strategies: The governance will research, vet, and select the most promising and secure yield-generating strategies for the locked frBTC.
  • Monitoring and rebalancing: The governance will continuously monitor the performance of the selected strategies and rebalance the portfolio as needed to optimize yield and manage risk.
  • Distributing profits: The governance will ensure that the profits generated from the yield-generating strategies are distributed fairly to all dxBTC holders.

By combining the security and decentralization of SUBFROST with the yield-generating potential of DeFi, dxBTC is intended to provide a powerful new tool for Bitcoin holders to grow their wealth.