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USD Issuance

The USD issuance process on SphereNet follows strict protocols designed to maintain stability and compliance. Through a carefully orchestrated sequence of steps, authorized issuers can mint and burn USD tokens, with each action requiring verifiable proof of corresponding treasury deposits or withdrawals.

Issuance Process​

Minting​

The minting process follows a carefully controlled sequence:

  1. An authorized issuer deposits USD into an approved custodian account
  2. The custodian performs comprehensive verification of the funds
  3. The custodian converts deposited funds into treasury instruments
  4. An external verifier provides an on-chain attestation of the deposit
  5. The mint authority verifies the attestation
  6. New tokens are created based on the verified deposit amount

This structured process ensures complete alignment between token supply and underlying assets.

Burning​

Token burning follows an equally rigorous sequence:

  1. An issuer initiates a burn request
  2. The specified tokens are immediately removed from circulation
  3. The custodian receives an automated withdrawal instruction
  4. The custodian processes the corresponding USD withdrawal
  5. The system updates supply metrics in real-time

Throughout this process, the system maintains perfect reconciliation between tokens and backing assets.

Treasury Management​

Deposit Requirements​

The foundation of USD stability rests on maintaining a minimum 1:1 backing ratio with approved treasury instruments. A sophisticated real-time collateral verification system works in concert with independent custody verification to monitor this backing. Automated compliance checks run continuously, providing assurance that all treasury operations meet regulatory and security requirements.

Yield Processing​

Treasury yields are collected daily and processed through an automated distribution system. The platform carefully tracks yield allocation for each token holder while managing the reserve pool and insurance fund contributions. This automated approach ensures transparent and efficient yield distribution while maintaining necessary reserves for system stability.

Circuit Breakers​

The platform incorporates sophisticated automatic safeguards that activate under specific conditions. These circuit breakers trigger if the backing ratio falls below established thresholds, unusual mint/burn volumes are detected, or custodian attestations are delayed. The system also monitors for market stress conditions and other system anomalies, providing proactive protection against potential risks.

Monitoring and Reporting​

A comprehensive monitoring framework tracks supply in real-time through the collateral verification system. Regular attestation requirements combine with automated compliance checks to ensure ongoing system integrity. This transparent reporting framework provides stakeholders with clear visibility into all aspects of USD operations while maintaining necessary security controls.