# Terms and Definition

<table><thead><tr><th width="201.96484375">Terms</th><th>Definition</th></tr></thead><tbody><tr><td>vBTC</td><td>vBTC is a digital asset backed by Bitcoin (BTC), designed to enable users to hold and transact Bitcoin more conveniently by using whole number units instead of long decimal strings. vBTC is pegged at a fixed rate of <strong>1 BTC = 10⁸ vBTC</strong>.</td></tr><tr><td>On-Chain</td><td>On-Chain refers to transactions or operations executed directly on the blockchain. For vBTC, this occurs on the <strong>BNB Chain</strong> in compliance with the <strong>BEP-20</strong> token standard.</td></tr><tr><td>Off-Chain</td><td>Off-Chain refers to transactions or operations conducted outside the blockchain. In the context of vBTC, these take place on the centralized exchange infrastructure provided by <strong>Nami Exchange</strong>.</td></tr><tr><td>Mint</td><td>Minting is the process of creating vBTC by depositing supported assets into the vBTC protocol, which then issues an equivalent amount of vBTC based on the fixed exchange rate of <strong>1 BTC = 10⁸ vBTC</strong>.</td></tr><tr><td>Redeem</td><td>Redemption refers to the process of converting vBTC back into another asset. Specifically, BTCB (Bitcoin on the BNB Chain) fixed exchange rate of 1 BTCB = 1 BTC = 10⁸ vBTC.</td></tr><tr><td>Slippage</td><td>Slippage refers to the difference between the expected price and the actual execution price of a trade, typically caused by market volatility or low liquidity.</td></tr><tr><td>Gas Fee</td><td>Gas Fees are transaction costs incurred on the blockchain, payable in the native token of the network (BNB on the BNB Chain).</td></tr><tr><td>Liquidity Pool</td><td>Liquidity Pool is a reserve of assets made available on decentralized exchanges (DEXs) to facilitate vBTC trading. Within the vBTC protocol, the liquidity pool is used to swap deposited assets into BTCB during the minting process. This pool ensures high liquidity, reduces slippage, and helps maintain price stability during vBTC transactions.</td></tr><tr><td>Collateral Assets</td><td>Refers to the underlying reserve securely locked in smart contracts to uphold the value of issued vBTC. Upon minting, the deposited assets (e.g., USDT, ETH) are converted into BTCB and stored in the protocol’s liquidity pool. BTCB serves as the on-chain collateral, guaranteeing that every vBTC in circulation is backed 1:1 with a satoshi-equivalent value.</td></tr></tbody></table>


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