Glossary
Lombard provides the infrastructure for Bitcoin Capital Markets onchain. The protocol transforms idle BTC into productive, yield-earning capital that moves freely across blockchains while maintaining institutional-grade security through a consortium of leading digital asset firms.
This glossary defines every key term you’ll encounter across the Lombard protocol. Use it as a reference alongside the docs .
Onchain Bitcoin
Bitcoin that is active and productive in the onchain economy, earning yield, used as collateral, or deployed across DeFi protocols. Bitcoin represents over $2 trillion in value, yet less than 1% exists onchain in productive use cases. Lombard exists to change that.
LBTC
Lombard’s yield-bearing Bitcoin token (Lombard Bitcoin). When you deposit BTC through Lombard, you receive LBTC, a liquid token you can use across DeFi while the underlying BTC earns income from a covered-call options strategy managed by Bitwise Investment Manager, LLC, targeting 2.5% net APY in BTC terms at full deployment.
LBTC uses a non-rebasing design. Rather than receiving additional tokens, the exchange rate between LBTC and BTC increases over time as yield accrues. Each LBTC becomes redeemable for progressively more BTC.
Key facts:
- Fully backed by native BTC at all times
- Yield accrues automatically through the exchange rate, no claiming required
- 20% Protocol rewards fee on strategy gains (high-water mark); no Protocol operating fee
- Supported across Ethereum, Base, Solana, and more
- Deployable across 50+ DeFi protocols: Aave, Morpho, Uniswap, Curve, Pendle, and more
- Redeemable for native BTC at any time (up to a 10-day redemption window)
BTC.b
Lombard’s non-yield Bitcoin token that maintains a strict 1:1 exchange rate with native BTC. Originally launched by Ava Labs, BTC.b was acquired by Lombard in October 2025.
Where LBTC is optimized for earning yield over time, BTC.b is optimized for speed and simplicity. The exchange rate is always exactly 1:1, redemptions are faster (no 10-day window), and there is no yield mechanism. This makes BTC.b well-suited for trading, short-term collateral needs, and applications where predictable pricing matters more than yield accumulation.
BTC.b also serves as the cryptographic receipt token inside Bitcoin Smart Accounts, recognizing custodied BTC as onchain collateral without any transfer of the underlying asset.
Key facts:
- Strict 1:1 BTC parity at all times
- 0% minting fee
- Faster redemptions than LBTC (2 hour withdrawal period vs LBTC’s 10-day window)
- Available on Monad, Stable, and Katana
- Secured by the same 14-member Security Consortium as LBTC
Vault Shares
Tokens received when depositing into a Lombard vault. Vault share tokens represent your position in the vault and appreciate as the vault generates yield. Redeem your share tokens at any time to withdraw your assets plus accumulated yield.
Bitcoin Earn
Lombard’s flagship vault product. Bitcoin Earn accepts LBTC, BTC.b, WBTC, or native BTC and allocates capital across professionally managed yield strategies. Rewards auto-compound into vault share tokens (BTCe).
Bitcoin Earn operates as a meta-vault, a single entry point that allocates deposits across multiple underlying strategies. The vault handles strategy execution, rebalancing, and yield optimization. No DeFi expertise required.
Strategies include:
- Bitcoin Money Market Strategy, variable DeFi lending yield managed by Sentora
- Bitcoin Onchain Credit Strategy, a fixed institutional credit premium powered by Flow Traders and Cap Protocol
Bitcoin Onchain Credit Strategy
A Bitcoin Earn allocation, also available as a standalone vault, that earns a fixed premium paid by Flow Traders, a publicly listed trading firm, to borrow stablecoins through Cap Protocol. Depositors’ Bitcoin assets provide the collateral coverage through Symbiotic’s collateral markets, and the premium flows back to depositors as Bitcoin-denominated yield.
The rate is agreed bilaterally between Lombard and Flow Traders and does not fluctuate with DeFi market conditions. The strategy uses no leverage and no token incentives.
Learn more: Bitcoin Onchain Credit Strategy
Bitcoin Smart Accounts (BSA)
The rail that connects institutional custody to onchain finance. A Smart Account designation is added to an existing custody account at a qualified custodian. The held BTC is then recognized onchain through a BTC.b receipt token, without the underlying Bitcoin ever leaving custody.
Legal title and beneficial ownership remain with the holder at all times. The architecture uses partially signed Bitcoin transactions (PSBTs) and time locks to form emulated covenants, enabling programmable locking on Bitcoin without changing the custody arrangement.
Who it’s for: Asset managers, crypto funds, corporate treasuries, and high-net-worth individuals who hold Bitcoin at qualified custodians and want DeFi access without transferring assets, surrendering control, or triggering tax events.
Current integrations:
- Morpho, use custodied BTC as collateral to borrow stablecoins or earn yield
- Bitwise Asset Management, extends BSA to additional institutional holders
Learn more: Bitcoin Smart Accounts
Security Consortium
A network of 14 independent institutional members that collectively operate the Lombard Ledger. Every critical protocol operation (deposits, mints, redemptions, and cross-chain transfers) requires cryptographic signatures from a supermajority (at least 10 of 14 members) before execution.
This means that even if four members were compromised simultaneously, no unauthorized action could be taken.
Members: OKX, Galaxy, DCG, Kraken, Wintermute, Amber Group, Antpool, F2Pool, Figment, Kiln, P2P.org, Bitwise Onchain Solutions, Cubist, Nansen.
The Consortium’s distributed model contrasts directly with WBTC (single custodian: BitGo) and cbBTC (single issuer: Coinbase), where a single entity holds full control.
Learn more: Security Model · Consortium Members
Lombard Ledger
A Cosmos-based appchain running CometBFT consensus, operated by the Security Consortium. The Lombard Ledger is the single source of truth for all protocol operations, every BTC deposit, every LBTC mint, every redemption, and every cross-chain transfer is recorded here before any onchain action is taken.
The Ledger also serves as the platform for collecting and distributing yield.
Learn more: Protocol Architecture
CubeSigner
The key management platform built by Cubist (a Consortium member) that protects all cryptographic keys in the Lombard system. Keys are generated and stored in Hardware Security Modules (HSMs) and never leave secure hardware, meaning no one (including Consortium members, Lombard, or Cubist) can see or extract private keys.
CubeSigner also enforces policies controlling how keys can be used, who can sign, what types of transactions, and under what conditions. These policies run in hardware and cannot be bypassed through software attacks.
Learn more: Protocol Architecture
Bascule Drawbridge
An independent verification layer operated by Cubist that provides a second check on all Consortium operations. For deposits, Bascule independently verifies that the BTC deposit exists on the Bitcoin network with 6 confirmations before any mint is authorized. For redemptions, Reverse Bascule verifies that the corresponding LBTC was actually burned before BTC is released.
Both the Consortium and Bascule must approve every operation, an attacker would need to compromise both systems simultaneously.
Learn more: Protocol Architecture
Bitcoin Connect
Lombard’s infrastructure platform for developers building Bitcoin products across any chain, protocol, or application. Rather than forcing teams to deploy on a specific Bitcoin L2 or build infrastructure from scratch, Bitcoin Connect provides production-grade tooling that connects native Bitcoin to the broader onchain ecosystem.
Teams integrate once and inherit infrastructure that has been production-tested at institutional scale, with zero downtime and no security incidents since launch.
What teams can build:
- Native BTC deposit flows (like a CEX)
- Bitcoin yield and vault products
- Whitelabelled Bitcoin products under their own brand
- Bitcoin as collateral for lending and derivatives
- AI agent integration with Bitcoin
Active partners: Binance, Bybit, Ledger, Xverse, Cool Wallet, Figment.
Lombard SDK
The first builder tool released under Bitcoin Connect. A complete, deployment-ready TypeScript SDK for integrating LBTC, BTC.b, minting flows, cross-chain transfers, and portfolio tracking directly into applications. Supports EVM, Solana, Sui, and Starknet.
Bitcoin Agent SDK
Lombard’s SDK for AI agents. Enables autonomous AI agents to hold, mint, earn yield on, and borrow against Bitcoin on behalf of users, without touching user keys. Compatible with LangChain, Vercel AI SDK, AgentKit, and Claude Desktop via MCP.
Learn more: Bitcoin for AI Agents
BARD
Lombard’s governance and utility token with a fixed supply of 1 billion. Used for governance voting, staking, and participation in the Lombard Finance Foundation. BARD is distributed through seasonal airdrops to Lux holders.
Learn more: Token Economics · Use BARD
Lux
Lombard’s rewards points system. Earn Lux by actively deploying LBTC and BTC.b across eligible DeFi protocols, passive holding does not earn Lux. Three multiplier tiers:
- DEX Liquidity, 1x
- Lending Collateral, 3x
- Lombard Strategies, 6x
Eligible chains: Ethereum, Solana, Avalanche, MegaETH, Base. Lux converts to BARD in seasonal airdrops.
Lombard Finance Foundation
The independent foundation governing the BARD token and the long-term development of the onchain bitcoin ecosystem. Formerly known as the Liquid Bitcoin Foundation. Website: lombardfinance.foundation
Learn more: Lombard Finance Foundation
Proof of Reserve
Real-time, onchain verification confirming that every LBTC and BTC.b in circulation is fully backed by native bitcoin. Powered by Chainlink, updating every 10 minutes. Independently verifiable by anyone onchain.
Non-Rebasing
A token design where your balance never changes, only the exchange rate moves. LBTC is non-rebasing: instead of receiving additional tokens as yield accrues, each LBTC simply becomes redeemable for more BTC over time. This simplifies DeFi integrations and avoids constant balance changes.
Learn more: Understanding Yield
Covered Call
The options strategy behind LBTC’s yield. A covered call means selling another party the right to buy Bitcoin at a set price (the strike) by a set date, in exchange for an upfront premium, while holding the Bitcoin in custody. Bitwise sells calls struck well above the current Bitcoin price against a portion of LBTC’s backing; the premiums, denominated in BTC, accrue to holders through the exchange rate. The strategy uses no leverage and no puts, and all options are financially settled, so Bitcoin never leaves custody.
Bitwise Investment Manager, LLC
The firm that manages LBTC’s covered-call yield strategy. Bitwise Investment Manager, LLC is an SEC-registered investment adviser, CFTC-registered commodity pool operator and trading advisor, and NFA member, and a wholly owned subsidiary of Bitwise Asset Management, Inc. Bitwise holds trading authority only over the active allocation, with no authority to withdraw, transfer, or rehypothecate the Bitcoin. Not to be confused with Bitwise Onchain Solutions, a Security Consortium member.
Active Allocation
The portion of LBTC’s backing (target 50-60%) deployed into the covered-call strategy. It is held in segregated, Lombard-owned accounts at qualified custodians under a tri-party agreement.
Liquidity Buffer
The portion of LBTC’s backing (40–50%) that remains in Security Consortium custody, structurally isolated from the covered-call strategy. It earns no option premium, bears no strategy risk, and is what funds BTC redemptions.
Tri-Party Agreement
The tri-party legal agreement between Lombard, Bitwise, and the custodian that governs the active allocation. It makes Bitwise’s bounded authority enforceable: Bitwise can place trades but cannot move Bitcoin, and neither Bitwise nor any options counterparty can instruct the custodian to move it. Only Lombard, as the account owner, can. Options are financially settled, so no Bitcoin moves as a result of options activity.
Protocol Rewards Fee
The only fee on LBTC’s yield strategy: 20% of strategy gains, subject to a high-water mark, meaning the fee applies only to net new gains above the strategy’s previous peak. There is no Protocol operating fee, and the liquidity buffer is never charged.
Minting
The process of creating LBTC or BTC.b. When BTC is deposited through Lombard and verified by the Security Consortium and Bascule Drawbridge, tokens are minted 1:1 on the user’s chosen chain.
Learn more: Protocol Architecture
Redemption
The process of redeeming LBTC back to native BTC. Involves a redemption window of up to 10 days, covering Lombard’s redemption and rebalancing cycle. Redemptions are funded from the liquidity buffer first. LBTC continues earning yield during the redemption window. Fee: 0.0001 LBTC.
Trustless Relayer
Infrastructure services that facilitate communication between blockchain networks and automate routine operations, deposit monitoring, bridge event monitoring, auto-minting, and redemption operations. The Relayer has limited privileges and cannot authorize mints or move funds without Consortium approval.