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

# What is Covenant system?

Covenant is a distributed, noncustodial stateful BTCFi system providing self custody native Bitcoin DeFi opportunities deterministically, programmable, and fully onchain, where the user always holds the keys.

Covenant offers stateful smart contract programmability, bridgeless & unwrapped cross-chain transfers and limitless EVM / \*VM DeFi for native BTC assets without wrapping, bridges, giving up custody or intermediaries.

Utilize real bitcoins using Covenant exactly like ETH or other cryptocurrency - trade, lend, borrow, perform cross-chain operations with native BTC - and even earn BTC-denominated yield - while retaining full user-custody on your BTC assets directly on Bitcoin. 

Permissionless finance. Never wrap, trust, or wait: enter end exit native DeFi with native BTC instantly, algorithmically, and without middlemen. Users always retain full control over their private keys and assets at all times, as trading occurs directly through smart contracts.

### Covenant system key features

Covenant system is: 

* 100% stateful, 
* operates fully onchain, 
* noncustodial, 
* distributed,
* smart contract-based,
* wrapless,
* bridgeless,
* open, and..
* deterministic system for native Bitcoin BTCFi and BTC cross-chain DeFi.

### How Covenant provides Bitcoin DeFi without wraps?

Instead of old-fashioned and imperfect wrap mechanics, that pose security risks due to their off-chain and centralized nature, Covenant system utilizes user-owned stateful channels. 

Covenant is a Bitcoin-origin distributed system with intrinsically embedded full EVM functionality for stateful native BTC cross-chain channeling all over EVM(\*VM) blockchains and DeFi ecosystems.

Channels technique is utilized in Lightning. However, Lightning channels lack such a vitally important property as state. 

Channels in Covenant are significantly improved and are 100% stateful due to Covenant EVM and smart contract support. 

Each step, from depositing and channel creation to BTC withdrawing are self-custody, performed deterministically and onchain, and don't require from the user to give up their ownership, private keys or assets.

Know more about Covenant stateful channels: [<mark style="color:blue;">Stateful channels →</mark>](/documentation/how-it-works/what-is-a-covenant-channel.md)

### How Covenant provides Bitcoin DeFi without bridges?

Covenant system doesn't utilize bridges as bridge technology is also at least partly off-chain and usually centralized, thus imperfect and poses security or custody-related risks.

Instead, Covenant utilizes chain-agnostic connectors as part of its public integration mechanics.

Covenant system offers public node setup for each integration, builds a block tree of each integrated network and relies on only immutable blocks, that are already confirmed and can not be reverted on the integrated blockchain itself. These mechanics allows Covenant to operate cross-chain without intermediaries or off-chain parts on every integrated network.

Know more about Covenant connectors: [<mark style="color:blue;">Bridgeless stateful transfers →</mark>](/documentation/how-it-works/bridgeless-stateful-transfers.md)

### Frequently asked questions

<details open>

<summary><strong>Does Covenant system have any manual or off-chain parts?</strong></summary>

No, Covenant system is fully onchain and automated and is based on combination of fully programmed smart contracts and native Bitcoin scripts.

</details>

<details>

<summary><strong>Is Covenant system verification process decentralized?</strong></summary>

Yes, Covenant system offers open, public, distributed, fully onchain verification processes for all of the system' operations and processes. You (everyone) can participate in verification process and even earn rewards in native assets of the networks, integrated with Covenant system (native BTC, etc.).

</details>