> ## Documentation Index
> Fetch the complete documentation index at: https://docs.hermetica.fi/llms.txt
> Use this file to discover all available pages before exploring further.

# How it Works

hBTC enables Bitcoin holders to earn **BTC-denominated yield** while retaining self-custody and the ability to redeem for **native Bitcoin**.

#### Deposit & Mint

Users deposit Bitcoin via the decentralized sBTC bridge and stake sBTC into the hBTC vault. In return, the vault mints **hBTC**, representing a proportional share of pooled assets and strategy exposure.

#### Yield Accrual

hBTC accrues yield daily through on-chain strategies, including basis capture and Bitcoin-native staking. Yield is automatically compounded and reflected in the **hBTC share price**. All strategy profits are ultimately converted back into Bitcoin.

#### Withdraw & Redeem

Users may redeem hBTC for sBTC or native Bitcoin, subject to protocol cooldowns and underlying chain settlement times defined by the sBTC bridge.

#### Risk Controls & Transparency

The protocol employs automated controls for leverage, delta exposure, and interest spread regimes. All material metrics, positions, and transactions are transparently displayed and independently verifiable on-chain.

Detailed explanations of capital flows, yield mechanics, risk controls, and accounting are available in the sections below:

<Columns cols={3}>
  <Card title="Flows" href="/hbtc/how-it-works/flows">
    <img noZoom className="block dark:hidden" alt="Flows" src="https://mintcdn.com/hermeticalabsinc/cr4cicPK4ZdtyX_c/assets/images/hbtc/how-it-works/hbtc-flows-light.png?fit=max&auto=format&n=cr4cicPK4ZdtyX_c&q=85&s=9762f095fce6691613a0031ba4e0b73e" width="1920" height="1080" data-path="assets/images/hbtc/how-it-works/hbtc-flows-light.png" />

    <img noZoom className="hidden dark:block" alt="Flows" src="https://mintcdn.com/hermeticalabsinc/cr4cicPK4ZdtyX_c/assets/images/hbtc/how-it-works/hbtc-flows-dark.png?fit=max&auto=format&n=cr4cicPK4ZdtyX_c&q=85&s=19a145494fccbf46432f6d462701f4b5" width="1920" height="1080" data-path="assets/images/hbtc/how-it-works/hbtc-flows-dark.png" />
  </Card>

  <Card title="Yield" href="/hbtc/how-it-works/yield">
    <img noZoom className="block dark:hidden" alt="Yield" src="https://mintcdn.com/hermeticalabsinc/cr4cicPK4ZdtyX_c/assets/images/hbtc/how-it-works/hbtc-yield-light.png?fit=max&auto=format&n=cr4cicPK4ZdtyX_c&q=85&s=10555fd9ec3f1dce4577f6aacd62e0f9" width="1920" height="1080" data-path="assets/images/hbtc/how-it-works/hbtc-yield-light.png" />

    <img noZoom className="hidden dark:block" alt="Yield" src="https://mintcdn.com/hermeticalabsinc/cr4cicPK4ZdtyX_c/assets/images/hbtc/how-it-works/hbtc-yield-dark.png?fit=max&auto=format&n=cr4cicPK4ZdtyX_c&q=85&s=acd18a2eabe597776cca3fb9fff2abcd" width="1920" height="1080" data-path="assets/images/hbtc/how-it-works/hbtc-yield-dark.png" />
  </Card>

  <Card title="Liquidity" href="/hbtc/how-it-works/liquidity">
    <img noZoom className="block dark:hidden" alt="Liquidity" src="https://mintcdn.com/hermeticalabsinc/cr4cicPK4ZdtyX_c/assets/images/hbtc/how-it-works/hbtc-liquidity-light.png?fit=max&auto=format&n=cr4cicPK4ZdtyX_c&q=85&s=072bb6057b70131e5f216421a3a33b5a" width="1920" height="1080" data-path="assets/images/hbtc/how-it-works/hbtc-liquidity-light.png" />

    <img noZoom className="hidden dark:block" alt="Liquidity" src="https://mintcdn.com/hermeticalabsinc/cr4cicPK4ZdtyX_c/assets/images/hbtc/how-it-works/hbtc-liquidity-dark.png?fit=max&auto=format&n=cr4cicPK4ZdtyX_c&q=85&s=479337f342ac5f39c65b5a7a75565af6" width="1920" height="1080" data-path="assets/images/hbtc/how-it-works/hbtc-liquidity-dark.png" />
  </Card>

  <Card title="Risk Controls" href="/hbtc/how-it-works/risk-controls">
    <img noZoom className="block dark:hidden" alt="Risk Controls" src="https://mintcdn.com/hermeticalabsinc/cr4cicPK4ZdtyX_c/assets/images/hbtc/how-it-works/hbtc-risk-controls-light.png?fit=max&auto=format&n=cr4cicPK4ZdtyX_c&q=85&s=f5aaa82c4c5372e33ad6ed4cc241a7bf" width="1920" height="1080" data-path="assets/images/hbtc/how-it-works/hbtc-risk-controls-light.png" />

    <img noZoom className="hidden dark:block" alt="Risk Controls" src="https://mintcdn.com/hermeticalabsinc/cr4cicPK4ZdtyX_c/assets/images/hbtc/how-it-works/hbtc-risk-controls-dark.png?fit=max&auto=format&n=cr4cicPK4ZdtyX_c&q=85&s=40b8d03bb2a203d7379274a65a33dc65" width="1920" height="1080" data-path="assets/images/hbtc/how-it-works/hbtc-risk-controls-dark.png" />
  </Card>

  <Card title="Accounting" href="/hbtc/how-it-works/accounting">
    <img noZoom className="block dark:hidden" alt="Accounting" src="https://mintcdn.com/hermeticalabsinc/cr4cicPK4ZdtyX_c/assets/images/hbtc/how-it-works/hbtc-accounting-light.png?fit=max&auto=format&n=cr4cicPK4ZdtyX_c&q=85&s=2983230561c4890e7259b339bf41bd7a" width="1920" height="1080" data-path="assets/images/hbtc/how-it-works/hbtc-accounting-light.png" />

    <img noZoom className="hidden dark:block" alt="Accounting" src="https://mintcdn.com/hermeticalabsinc/cr4cicPK4ZdtyX_c/assets/images/hbtc/how-it-works/hbtc-accounting-dark.png?fit=max&auto=format&n=cr4cicPK4ZdtyX_c&q=85&s=2278bbfb0bc31a9597569bb56b8a3dde" width="1920" height="1080" data-path="assets/images/hbtc/how-it-works/hbtc-accounting-dark.png" />
  </Card>

  <Card title="Governance" href="/hbtc/how-it-works/governance">
    <img noZoom className="block dark:hidden" alt="Governance" src="https://mintcdn.com/hermeticalabsinc/cr4cicPK4ZdtyX_c/assets/images/hbtc/how-it-works/hbtc-governance-light.png?fit=max&auto=format&n=cr4cicPK4ZdtyX_c&q=85&s=5cac2c80ae248921ab13da2c8df62162" width="1920" height="1080" data-path="assets/images/hbtc/how-it-works/hbtc-governance-light.png" />

    <img noZoom className="hidden dark:block" alt="Governance" src="https://mintcdn.com/hermeticalabsinc/cr4cicPK4ZdtyX_c/assets/images/hbtc/how-it-works/hbtc-governance-dark.png?fit=max&auto=format&n=cr4cicPK4ZdtyX_c&q=85&s=49d614596b834e19fb0257e15376ae7f" width="1920" height="1080" data-path="assets/images/hbtc/how-it-works/hbtc-governance-dark.png" />
  </Card>
</Columns>