sBTC (SLOHM Bitcoin)#

SLOHM Bitcoin Liquidity Layer#

Introduction#

sBTC is the Bitcoin-denominated liquidity layer operating within the Bitcoin L1 ecosystem through OP_NET.

It enables trading, liquidity provisioning, and DeFi functionality within a Bitcoin-native execution environment.

sBTC is not a direct wrapper of native Bitcoin. It is a fully collateralized asset backed by tBTC.

• Native BTC acts as an input route into the system
• Treasury BTC is accounted internally in sBTC-denominated terms

Core Design Principle#

Circulating sBTC = tBTC Reserves#

At all times:

• sBTC is minted only after tBTC is received
• sBTC is fully collateralized
• Only circulating sBTC is redeemable

System Components#

Native BTC#

Native BTC serves two roles:

• Bonding asset for SLOHM treasury
• Input route for minting sBTC via conversion to tBTC

BTC bonded into treasury:

• Is permanently locked
• Is accounted internally in sBTC terms
• Does not contribute to circulating supply

tBTC#

tBTC is the reserve asset backing circulating sBTC.

• Used for minting sBTC
• Used for redemption of sBTC
• Represents the liquid Bitcoin bridge layer

sBTC#

sBTC is:

• A Bitcoin-denominated unit of account across the system
• A liquid asset when circulating
• A non-circulating accounting unit when held in treasury

Supply Model#

sBTC exists in two implicit forms:

• Circulating sBTC: minted from tBTC and used in markets
• Treasury sBTC: internal accounting representation of bonded BTC

Only circulating sBTC:

• Is transferable
• Is used in LP and trading
• Is redeemable into tBTC

High-Level Architecture#

Minting Mechanisms#

Direct Mint (tBTC → sBTC)#

1. User deposits tBTC
2. tBTC is received in reserve
3. Equivalent sBTC is minted

Indirect Mint (BTC → tBTC → sBTC)#

1. User deposits BTC
2. BTC is converted into tBTC
3. tBTC is received in reserve
4. sBTC is minted

Rule: sBTC is minted only after tBTC is received

Mint Flow Diagram#

Redemption Mechanism#

sBTC → tBTC#

1. User submits sBTC
2. sBTC is burned
3. Equivalent tBTC is released

Important Notes#

• Only circulating sBTC is redeemable
• Redemption returns tBTC on Ethereum
• Native BTC redemption is not supported

Redemption Flow#

Liquidity Design#

• NativeSwap pair: SLOHM / BTC
• Primary pair: SLOHM / sBTC
• Secondary pair: SLOHM / MOTO

Tentative Bonding Model#

• BTC — 10%
• SLOHM/sBTC LP — 5%
• SLOHM/MOTO LP — 3%
• MOTO — 2.5%

Key Rules#

• Only tBTC-backed sBTC is circulating
• Treasury BTC is non-circulating
• sBTC minted from treasury BTC never enters circulation
• Redemption applies only to circulating supply

Conclusion#

sBTC serves as the Bitcoin liquidity layer designed to power trading and decentralized finance within the SLOHM ecosystem and the broader Bitcoin L1 ecosystem.

Core Flows#

• Minting: tBTC → sBTC
• Input: BTC → tBTC → sBTC
• Redemption: sBTC → tBTC

System Separation#

• Treasury reserves → BTC (non-circulating)
• Liquidity layer → tBTC-backed sBTC

This separation ensures:

• Clarity
• Solvency
• Composability