# Flow of Funds

> **From deposit to yield: how your capital works.**

Sova provides a **transparent, on-chain path** for your cbBTC to generate yield through cross-chain settlement activity.

***

## Overview

| Stage       | What Happens                           |
| ----------- | -------------------------------------- |
| **Deposit** | cbBTC transferred to vault contract    |
| **Mint**    | svBTC tokens issued to your wallet     |
| **Yield**   | Settlement fees increase exchange rate |
| **Redeem**  | Burn svBTC, receive cbBTC + yield      |

***

## 1. Deposit cbBTC

You begin by depositing **cbBTC** into the Sova vault on Base.

| Detail           | Description                    |
| ---------------- | ------------------------------ |
| **Contract**     | Vault smart contract on Base   |
| **Verification** | Transaction confirmed on-chain |
| **Activation**   | Deposit immediately active     |

***

## 2. Receive svBTC

In return for your deposit, you receive **svBTC tokens**.

| Detail            | Description                        |
| ----------------- | ---------------------------------- |
| **Token Type**    | ERC-4626 vault shares              |
| **Exchange Rate** | svBTC minted at current rate       |
| **Tracking**      | Position tracked entirely on-chain |

***

## 3. Yield Generation

While your cbBTC is in the vault, solvers access vault liquidity to settle cross-chain swaps. A 0.5% fee is captured on each transaction and flows back to the vault, increasing the svBTC:cbBTC exchange rate.

> **Continuous Yield**
>
> Capital cycles through settlements continuously. More swap volume = more fees = higher yield.

***

## 4. Exchange Rate Appreciation

Your yield is reflected in the svBTC:cbBTC exchange rate:

| Aspect      | Description                                |
| ----------- | ------------------------------------------ |
| **Balance** | Your svBTC balance stays constant          |
| **Value**   | cbBTC redemption value increases over time |
| **Action**  | No claiming or compounding required        |

***

## 5. Redemption

When you're ready to exit:

| Step        | Description                       |
| ----------- | --------------------------------- |
| **Request** | Submit withdrawal in the Sova app |
| **Wait**    | 30-day redemption period          |
| **Receive** | cbBTC at current exchange rate    |

> **30-Day Redemption**
>
> All withdrawals are subject to a 30-day redemption period to ensure orderly liquidity management.

***

## Next Steps

* [Deposit Flow](/sova-for-users/flow-of-funds/onchain-deposit-flow.md) — Step-by-step deposit guide
* [Redemption Flow](/sova-for-users/flow-of-funds/redemption-flow.md) — How withdrawals work


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