> For the complete documentation index, see [llms.txt](https://docs.btcd.fi/llms.txt). Markdown versions of documentation pages are available by appending `.md` to page URLs; this page is available as [Markdown](https://docs.btcd.fi/token-overviews/sbtcd.md).

# sBTCD

sBTCD is the yield-bearing staked version of BTCD. Holding sBTCD entitles the holder to a pro-rata share of the yield generated by the BTCD Portfolio in excess of what is required to maintain the peg.

### Mechanics

* Stake: deposit BTCD into the staking contract; receive sBTCD.
* Appreciation: yield earned by the portfolio is paid into the staking contract on a periodic basis. This causes 1 sBTCD to represent a progressively larger amount of BTCD over time.
* Unstake: redeem sBTCD for the underlying BTCD.

### Yield smoothing

Rather than distributing yield exactly as it is earned, payouts reflect a moving average of recent earnings governed by a smoothing factor. This serves two purposes:

* Smoother, more predictable yield for stakers.
* A natural overcollateralization buffer, since yield is distributed with a lag to what is earned.

*The exact smoothing factor and payout cadence may be adjusted over time*.

### Yield concentration

Every asset in the BTCD Portfolio earns yield, regardless of whether the corresponding BTCD is staked. But only stakers receive yield distributions. As a result, sBTCD holders earn yield not only on their own capital but also on capital held by unstaked BTCD holders. This concentrates the portfolio's yield into a smaller staked supply, potentially making sBTCD's yield meaningfully higher than the underlying assets' average yield.

### The BTCD/sBTCD DeFi Dynamic

The BTCD/sBTCD pair creates a self-reinforcing demand cycle, analogous to the USDe/sUSDe loop:

* Users deposit sBTCD as collateral and borrow BTCD against it.
* Borrowed BTCD is swapped for more sBTCD, which is added as additional collateral. This is the "loop."
* Borrowing demand for BTCD creates lending yield for users who supply BTCD to lending markets.
* The result: BTCD earns yield even when unstaked, while sBTCD remains the primary yield-bearing instrument.

This dynamic is structurally beneficial: the more BTCD remains unstaked, the more yield concentrates in sBTCD, increasing sBTCD's yield, which increases looping demand, which increases BTCD lending yield.

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