> For the complete documentation index, see [llms.txt](https://docs.stackingdao.com/stackingdao/llms.txt). Markdown versions of documentation pages are available by appending `.md` to page URLs; this page is available as [Markdown](https://docs.stackingdao.com/stackingdao/the-stacking-dao-app/stbtc-liquid-btc-staking-with-btc-rewards/stbtc-basics.md).

# stBTC basics

stBTC is Stacking DAO's liquid staking token for Bitcoin on Stacks. It lets you earn Bitcoin Staking yield while keeping a transferable token that can be used across Stacks DeFi.

You can mint stBTC with sBTC. You can also start with native BTC through the BTC deposit route in the Stacking DAO app; the BTC is converted through the sBTC peg path before stBTC is minted.

### How stBTC works

1. You deposit sBTC, or use the native BTC deposit route.
2. You receive stBTC at the current stBTC/sBTC conversion rate.
3. Stacking DAO manages the backing sBTC across a liquid reserve and PoX-5 sBTC bond positions.
4. Bitcoin Staking rewards accrue in sBTC and are added to the assets backing stBTC.
5. As rewards accrue, each stBTC represents more sBTC.

{% hint style="info" %}
You do not need to deposit or hold STX to mint stBTC. Stacking DAO supplies the STX pairing required by Bitcoin Staking from the backing associated with its STX liquid staking products.
{% endhint %}

### How rewards accrue

stBTC is an auto-compounding token. Rewards are not streamed to your wallet as separate payments. Instead, they increase the value of stBTC relative to sBTC.

For example, if the conversion rate increases, the same amount of stBTC can later be redeemed for more sBTC. The rate shown in the Stacking DAO app reflects the current relationship between stBTC and its sBTC backing.

Yield is variable and is not guaranteed. The realised return can change with Bitcoin Staking rewards, protocol fees, the allocation required for paired STX, and how much liquidity remains in reserve.

### What you can do with stBTC

While the backing assets participate in Bitcoin Staking, you can:

* Hold stBTC and continue accruing yield through the conversion rate.
* Transfer stBTC to another supported Stacks wallet.
* Use stBTC in supported DeFi applications, including as collateral on Zest Protocol.
* Redeem stBTC through Stacking DAO.

Using stBTC in another protocol introduces that protocol's own smart-contract, liquidation, liquidity, and market risks.

### stBTC, sBTC, and BTC

These assets are related, but they are not interchangeable:

| Asset     | What it is                                                                                 |
| --------- | ------------------------------------------------------------------------------------------ |
| **BTC**   | Native Bitcoin on Bitcoin L1.                                                              |
| **sBTC**  | A BTC asset on Stacks. It is the asset that backs stBTC and in which stBTC rewards accrue. |
| **stBTC** | Stacking DAO's liquid, yield-bearing Bitcoin Staking token on Stacks.                      |

Depositing native BTC through the app uses the sBTC peg path. This is different from committing native BTC to an institutional Bitcoin Staking bond, where the BTC remains timelocked on Bitcoin L1 and does not automatically become stBTC.

### Liquidity and withdrawals

Stacking DAO supports two withdrawal paths:

* **Instant withdrawal:** redeem against available reserve liquidity and pay the fee displayed in the app.
* **Standard withdrawal:** initiate a withdrawal and wait through the displayed cooldown before claiming the underlying asset.

Availability, fees, and estimated completion times are shown in the app and can change with protocol conditions.

For step-by-step instructions, see Depositing BTC or sBTC for stBTC and Withdrawing from stBTC.

For contract-level integration details, see [stBTC: Stacking DAO Core](https://docs.stackingdao.com/stackingdao/core-contracts/stbtc-stacking-dao-core).

{% hint style="warning" %}
stBTC involves smart-contract, Bitcoin Staking, sBTC, liquidity, and market risks. Yield, conversion rates, withdrawal times, and fees are variable. Review the values displayed in the app before confirming a transaction.
{% endhint %}