Function FBTC: How the Bitcoin-Backed Token Works

Function describes itself as infrastructure for making bitcoin usable in DeFi. FBTC is its only token product. The company announced a $10 million seed round in July 2025 from Galaxy Digital, Antalpha and Mantle. In the same announcement it confirmed the switch from the Ignition name, with Thomas Chen as CEO ¹⁴. DefiLlama first listed FBTC in August 2024 ¹⁵.

The terms of service are issued by FireSpire Limited "or its affiliates" under Hong Kong law. Hong Kong is also on the list of jurisdictions the service excludes ¹³. No incorporation jurisdiction is stated.

Oversight sits with a Security Council that approves contract upgrades and reviews reserves. Sources disagree on who sits on it. The docs list Antalpha, Mantle and Cobo ⁴. The About page names Antalpha, Galaxy and Mantle ¹². The 2025 press release says Galaxy leads it ¹⁴. Check Function's latest disclosure if council membership matters to you.

FBTC follows a merchant model, similar to other custodial wrapped-BTC tokens:

1. Onboarding. A merchant, which can be an institution, a permissioned protocol or a network, completes KYB checks. It then receives its own BTC deposit and withdrawal addresses ³⁴.
2. Mint. The merchant sends BTC to its custody deposit address and submits a mint request to the FireBridge contract. Off-chain services see both the Bitcoin deposit and the on-chain request. A threshold-signature (TSS) gateway then confirms the mint, and FBTC is issued on the destination chain ².
3. Redeem. The merchant submits a burn request. Once the request is confirmed, BTC is sent from custody to the merchant's registered withdrawal address ³⁵.
4. Cross-chain moves. FBTC holders can bridge between supported chains through the same contracts. The transfer is confirmed on both the source and target chain ⁷¹⁶.

Retail users do not mint. Function's homepage "Get FBTC" button sends visitors to a conversion page on the Bybit exchange, and FBTC also trades on DEXs ¹⁶. A retail holder's exit is therefore a sale on the market, not a redemption with Function, and the price can differ from BTC.

Locked FBTC (FBTC1) is a separate token for yield strategies. FBTC sent to a partner vault is converted. The matching BTC moves to a separate address that the partner uses for its strategy. Redemptions are batched "periodically", so exits from FBTC1 can take longer than exits from plain FBTC ¹⁰.

• Minting: no fee beyond gas, according to the terms ¹³.
• Redemption: a redemption fee applies on top of gas ¹³. Merchant mint and burn fees use a tiered schedule. Rates are not published and are available from [email protected] ⁶.
• Bridging: a bridge fee plus gas on each chain ⁵. The fee contract allows a percentage rate with a minimum fee, set per operation and per chain by the contract owner ⁶.
• Retail: buying FBTC on an exchange or DEX carries that venue's trading fee and any spread. This is not a Function charge.

The terms let the company change fees at any time ¹³.

Who holds the BTC. Under the terms, depositors "do not retain possession, custody or control" of deposited BTC. It sits in MPC addresses run by custodians, with key shares spread across several institutions ⁴¹³. FBTC is therefore a claim on a custodied reserve, not self-custodied bitcoin.

Reserve transparency. Function publishes fixed reserve addresses and explains how to look up each merchant's deposit address from the Ethereum contract. Chainlink Proof of Reserve feeds track the reserves on Ethereum and Arbitrum ⁸. These checks confirm that the BTC addresses exist and hold balances. They are not a full financial audit of the operator.

Admin powers. Authorized roles can pause minting, burning and cross-chain transfers. The contract owner can "rescue" tokens sent to the contracts. A Safety Committee can emergency-burn FBTC1 ⁹. These controls exist for incident response, but they also mean the system relies on trusted parties.

Audits. Function lists contract audits by BlockSec, Secure3 and MixBytes for FBTC, and by BlockSec and Secure3 for Locked FBTC ¹¹. Audits review code at a point in time and do not cover custodian operations.

• Custodian and governance risk: if custodians or council members fail or collude, the reserve is at risk. No on-chain mechanism prevents this.
• Redemption access: only approved merchants can redeem for BTC. In a market dislocation, retail holders depend on secondary-market liquidity ⁵¹³.
• Bridge and contract risk: FBTC is deployed on ten mainnets, and each deployment and cross-chain path adds attack surface ⁷.
• Legal access: the terms exclude the US, mainland China, Hong Kong, Singapore and sanctioned regions, and the company may suspend access, including withdrawals ¹³.

For background on how bridged assets differ between chains, see our explainer on layer 2 networks.