stBTC
Last updated
Last updated
stBTC is an ERC4626 token that represents bitcoin (BTC) within the Acre protocol. The ERC4626 standard is a tokenized vault standard, which is designed for the efficient management of vaults and rewards. stBTC tokens are composable in DeFi, which means you can use it to provide liquidity across EVM networks and earn additional rewards.
Rewards generated by the underlying BTC assets deposited into Acre accrue to the vault, which increases the value of the stBTC token, relative to BTC.
stBTC represents a share of the BTC held in Acre, and can be redeemed for an increased amount of BTC, dependent upon the amount of BTC earned by the vault.
stBTC is a non-rebasing token, which means that the stBTC token value increases, relative to BTC, rather than the amount of stBTC increasing. In other words, a user's balance of stBTC does not change as BTC is earned via staking, but the stBTC price increases relative to BTC.
Rebasing tokens, on the other hand, increase the token balance in the users wallet as rewards accrue to the vault, which can lead to DeFi integration and tax complexities.
The implementation of non-rebasing tokens is straightforward and less prone to errors, which reduces the risk of bugs and security vulnerabilities for stBTC.
When staking BTC to receive stBTC, you might not always receive 1 stBTC for your 1 BTC deposited.
This is because stBTC represents a share of the underlying collateral in the stBTC vault.
Take this example:
Say there are 100 stBTC tokens, and 110 BTC in the vault earned through staking.
This makes the stBTC:BTC conversion rate 1:1.1, since every 1 stBTC can be redeemed for 1.1 BTC.
If a user was to redeem 1 stBTC, they would receive 1.1 BTC.
How would this work for a deposit?
If a user was to deposit 1 BTC into the vault, they would receive stBTC proportional to ratio of stBTC:BTC.
eg, if they deposit 1 BTC they will receive 1/1.1 = ~0.91 stBTC to represent their deposit.
Over time, as additional rewards accrue to the vault, the 0.91 stBTC could be redeemed for greater than the original deposit of 1 BTC, since the underlying collateral has grown due to staking. Redemption after rewards
Say there are 100.91 stBTC tokens, and now 120 BTC in the vault earned by staking.
Our user redeems their 0.91 stBTC and receives 0.91/100.91*120 = ~1.08 BTC
