> ## Documentation Index
> Fetch the complete documentation index at: https://docs.denar.markets/llms.txt
> Use this file to discover all available pages before exploring further.

# Mint and redeem

> How dUSD enters and leaves circulation: 1:1 against USDG at the treasury, with a redemption path that pulls from the liquid buffer first and unwinds the lending position automatically when it must.

<Info>
  Not yet live. This page documents the deployed behavior of the treasury contract; launch parameters (fees, buffer floor, caps) will be published here at deployment.
</Info>

## Minting

Deposit USDG, receive dUSD, one for one, minus the mint fee if one is set:

```
dUSD out = USDG in × (1 − mint fee)
```

There is no oracle in this path and no price to cross — a mint is a deposit into the treasury's book, not a trade. Whatever you mint, the reserve grows by exactly the USDG you brought, so minting can never dilute existing holders.

Fees on both legs are governance parameters that start at industry standard — **zero** — and exist mainly as peg-defense levers. Any fee collected becomes reserve surplus, which flows to sdUSD stakers at the next harvest, not to the treasury operator.

## Redeeming

Redemption burns your dUSD and pays USDG from the treasury, again 1:1 minus the redemption fee if one is set. The treasury looks for your dollars in order:

<Steps>
  <Step title="The liquid buffer">
    A protocol-enforced share of the reserve is always held as plain USDG. Ordinary redemptions end here, in one transaction.
  </Step>

  <Step title="Auto-unwind from the lending vault">
    If the buffer is short, the treasury automatically withdraws the difference from its position in the Denar lending vault — inside the same redemption transaction, at the vault's normal share price, with no discount imposed on anyone. It pulls only what the vault can pay at that moment.
  </Step>

  <Step title="Keeper rotation from SGOV">
    T-bill holdings cannot be sold atomically (SGOV trades through Rialto, off-chain quoted). If a redemption exceeds even the vault's liquidity, it reverts rather than paying a worse price — and keepers rotate SGOV back to USDG to refill the buffer, bounded by the Chainlink price and a daily volume limit.
  </Step>
</Steps>

<Tip>
  The design principle: a redemption either pays **a full dollar** or it waits. There is no haircut path, no fee escalation under stress, and no gate that pays early exits from later holders' backing.
</Tip>

## The buffer floor

The treasury cannot invest through its own redemption liquidity: rotating USDG into SGOV, or parking it in the lending vault, is blocked whenever it would leave the liquid buffer below an enforced floor (a percentage of outstanding dUSD). The floor is a contract check, not an operator habit.

## When mint or redeem can pause

The owner can pause minting and redemption independently — an emergency brake, deliberately blunt and visible on-chain. Beyond that, the treasury inherits one external dependency worth stating plainly: **USDG itself is an issued stablecoin** (Paxos). If its issuer froze the treasury's USDG, redemptions would halt for as long as the freeze lasted. The same dependency applies to every USDG protocol on the chain, Denar's lending markets included.