> For the complete documentation index, see [llms.txt](https://docs.bouncebit.io/llms.txt). Markdown versions of documentation pages are available by appending `.md` to page URLs; this page is available as [Markdown](https://docs.bouncebit.io/bouncebit-cedefi/introduction/architecture.md).

# Architecture

BounceBit is an asset‑driven protocol: custody, execution, and onchain accounting are separated but coordinated so capital can live on one ledger and stay productive everywhere.

***

### TL;DR

* **One ledger:** BounceBit Chain (EVM, PoS) is the settlement layer for all protocol activity.
* **Represented assets:** External assets are reflected as **BB‑Tokens** **minted on BounceBit Chain** (no bridges). Underlyings for V3 are custodied at **CEFFU**.
* **Native security & rewards:** BB is staked via the **Liquid Staking Module (LSM)** to mint **stBB**. A portion of node‑staking rewards funds protocol incentives.
* **Optional incentives:** Eligible BB‑Tokens can **optionally** stake into the **Farm** to earn **stBB‑denominated** rewards.
* **Institutional CeDeFi:** **Prime** sources tokenized cash equivalents (e.g., Benji, BUIDL via Securitize) with custody at **Standard Chartered** and collateral **mirrored to OKX** for execution.

***

### Architecture at a Glance

| Layer                    | What it does                                | Key objects                                                                                                 |
| ------------------------ | ------------------------------------------- | ----------------------------------------------------------------------------------------------------------- |
| **Settlement**           | Executes and records all state              | **BounceBit Chain** (EVM PoS)                                                                               |
| **Security**             | Secures consensus; issues liquid staking    | **BB**, **LSM → stBB**                                                                                      |
| **Asset Representation** | Reflects external assets natively on chain  | **BB‑Tokens** (minted on BounceBit; underlyings at **CEFFU** for V3)                                        |
| **Incentives**           | Aligns usage with security                  | **Farm** (rewards siphoned from node‑staking; paid in **stBB**)                                             |
| **CeDeFi Strategies**    | Institutional cash‑equivalent rails         | **Prime** (custody at **Standard Chartered**, collateral mirroring to **OKX**; sourcing via **Securitize**) |
| **Applications**         | Markets and products that compose the above | Perps, swaps, money markets, structured yield                                                               |

<figure><img src="/files/7bM35PQPqaUc3tbxrYie" alt=""><figcaption></figcaption></figure>

### User Journeys

#### A) Bring assets on

You allocate external assets to an approved custodian program. The protocol mints **BB‑Tokens for you on BounceBit Chain**—a bridgeless representation independent of the asset’s origin network. You hold BB‑Tokens in your wallet; the underlyings stay with the custodian (e.g., CEFFU for V3).

> **Note:** BB‑Tokens themselves are **not** in CEFFU custody; only their **underlying assets** are.

#### B) Farm (optional)

If you opt in, you can stake eligible BB‑Tokens into the **Farm** to earn rewards **in stBB**. These rewards come from a **siphoned portion of node‑staking yield**, not from liquidity pool emissions.

#### C) Use in apps

Because everything settles on one ledger, your BB‑Tokens and stBB flow through perps, swaps, money markets, and structured products with fewer hops and lower operational friction.

#### D) Redeem

Burn your BB‑Tokens on BounceBit Chain and receive the underlying assets from custody according to the relevant product’s rules and schedule.

***

### Component Deep Dives

#### 1) BounceBit Chain (Settlement)

**What it is.** An EVM‑compatible PoS Layer 1 that provides deterministic accounting for positions, collateral, and rewards.

**Why it matters.** A single state machine removes reconciliation overhead between CeFi and DeFi rails; capital can be reused instantly across products.

**How it works.** Validators stake **BB** and can be slashed for misbehavior. The **Liquid Staking Module (LSM)** mints **stBB**, a freely composable LSD used across DeFi and as the reward unit for the Farm.

***

#### 2) BB‑Tokens (Asset Representation)

**What they are.** On‑chain vouchers representing external assets (BTC, ETH, stablecoins, other supported assets).

**Why it matters.** They create a **bridgeless** path from custody to on‑chain utility while preserving clean separation of roles.

**Issuance.** After assets are placed with an approved custodian, the protocol **mints BB‑Tokens on BounceBit Chain for the user**. Tokens live in the user’s wallet; underlyings (V3) live at **CEFFU**.

**Redemption.** Burn BB‑Tokens on chain; custodian releases the corresponding underlying per program rules.

> **Not a bridge:** Supply discipline is enforced by on‑chain mint/burn controllers mapped to custodial attestations rather than cross‑chain lock/unlock mechanics.

***

#### 3) Farm (Protocol Incentives)

**Purpose.** Align protocol usage with network security.

**Mechanics.** Users **opt in** to stake eligible BB‑Tokens. Rewards are **paid in stBB** and sourced from a **programmatic siphon of node‑staking rewards**. No LP emissions; incentives are bounded by validator economics.

**Result.** A sustainable incentive loop that rewards productive collateral without distorting markets.

***

#### 4) Prime (Institutional CeDeFi)

**Role.** Access to tokenized cash equivalents and institutional execution while keeping custody segregated.

**Instruments.** Sourced via **Securitize** (e.g., Franklin Templeton’s Benji, BlackRock’s BUIDL).

**Custody & execution separation.** Assets are held at **Standard Chartered** (G‑SIB). Collateral is **mirrored to OKX** for venue execution. Custody remains with the bank; collateral moves programmatically for fills.

**Accounting.** Exposures are reflected on BounceBit Chain so they can compose with BB‑Tokens and stBB across apps.

**Benefits.** Reduced venue risk, audit‑ready reporting, and 24/7 collateral mobility with eligibility controls when required.

***

### Governance & Upgrades

* **Parameters:** Emission shares, Farm eligibility, supported underlyings are managed on chain.
* **Process:** Testnet → canary → mainnet, with public notices and timelocks where applicable.

***

### Glossary

* **BB:** Native token used for fees and staking.
* **stBB:** Liquid staking derivative of BB issued by the LSM; reward unit for Farm.
* **BB‑Tokens:** On‑chain vouchers for assets held with approved custodians; minted on BounceBit Chain; underlyings (V3) at CEFFU.
* **Farm:** Optional staking of eligible BB‑Tokens to earn stBB rewards sourced from node‑staking.
* **Prime:** Institutional CeDeFi layer with custody at Standard Chartered and collateral mirroring to OKX; instruments sourced via Securitize.