> ## 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.
# The reserve
> What backs dUSD: a liquid USDG buffer, a position in the Denar lending vault, and SGOV tokenized T-bills — valued pessimistically, harvested only above a retained safety cushion.
Not yet live. This page documents the deployed behavior of the treasury contract; the live reserve breakdown will be shown in the app at launch.
Every dUSD is matched by at least one dollar of reserve. The treasury's whole job is deciding *where* that dollar sits — and the contracts bound every choice it can make.
## The three sleeves
| Sleeve | Earns | Liquidity | Bound by |
| ----------------------------- | ------------------------------------------ | -------------------------------------------------------- | -------------------------------------- |
| Liquid USDG | Nothing | Instant | An enforced minimum (the buffer floor) |
| Denar lending vault | Borrower interest across the stock markets | Same-transaction, up to the vault's unborrowed liquidity | A maximum share of total USDG |
| SGOV (tokenized 0–3m T-bills) | The T-bill rate | Keeper-rotated through Rialto, slippage-bounded | A daily rotation cap |
The lending sleeve is the same [USDG vault](/use/earn) every Denar lender uses — the stablecoin does not get a private book, it supplies the public one. That is deliberate: every dUSD minted deepens the lending markets.
## How SGOV actually pays
SGOV on Robinhood Chain is a stock token like the collateral the markets already handle: raw balances never change, and corporate actions move the token's **multiplier** ([the ERC-8056 mechanism](/protocol/corporate-actions)). Each month the ETF's NAV drops by the dividend at the ex-date, and a few days later the issuer reinvests the distribution by raising the multiplier — net of taxes withheld at the issuer level, which is why the reserve plans on the *net* rate, not the headline T-bill rate.
The treasury values SGOV off its Chainlink feed with two deliberate asymmetries:
* A **scheduled multiplier decrease** (a reverse split) is priced in the moment it is announced.
* A **scheduled increase** (a dividend reinvestment) is ignored until the feed actually pays it.
In both directions the error goes against the treasury's own surplus, never against holders.
## Harvest: how earnings leave the reserve
When the reserve is worth more than the dUSD it backs, the surplus above a **retained cushion** can be harvested: minted as dUSD (fully backed by the surplus it represents), split between a capped performance fee and the [sdUSD](/dusd/staking) reward drip.
The cushion is the part worth reading twice:
```
retained = buffer% × max(outstanding dUSD, risky reserve)
+ haircut% × lending-vault position
```
It scales with the **risky side of the book** — SGOV plus the vault position — not just with liabilities, so it cannot be argued down to zero by redemptions while market exposure remains. And harvesting is blocked entirely while SGOV is processing a corporate action, so no distribution is ever minted off a price the issuer has flagged as untrusted.
## What can actually go wrong
A 0–3 month T-bill token barely moves, but it moves. A drawdown after a harvest eats the retained cushion first; a deep one would leave the reserve below liabilities until income refills it. This is the risk the cushion is sized for, and the honest reason yield above it is distributed rather than promised.
USDG is issued by Paxos; SGOV is a tokenized debt security issued by Robinhood's Jersey entity. The reserve holds both. Neither risk is hedgeable on-chain — dUSD's backing is as good as those issuers, and the documentation will always say so.
The vault sleeve carries the same risks as any vault deposit — bad debt in a market it supplies, or utilization delaying withdrawal. The auto-unwind only ever withdraws at the vault's honest share price, and the sleeve is capped.
Redemptions are first-come-first-served at one dollar. If the reserve were ever worth less than liabilities, early redeemers would exit whole and late ones would bear the gap — the standard property of every PSM-style dollar, stated here rather than hidden. The buffer floor, the pessimistic valuation and the retained cushion exist to keep that state unreachable.