> For the complete documentation index, see [llms.txt](https://docs.usd8.ai/llms.txt). Markdown versions of documentation pages are available by appending `.md` to page URLs; this page is available as [Markdown](https://docs.usd8.ai/transparency/how-reserves-are-managed.md).

# How Reserves Are Managed

How USD8 reserves are held, who manages them, and how they are reviewed — the off-chain process behind the on-chain dollar.

USD8 is a fully backed dollar. The on-chain token is only half the story: the other half is how the corresponding assets are held, valued and protected. This page is the institutional side of that picture — who is responsible, how duties are split, and what you can verify.

It is written in the same spirit as the reserve and custody pages of other yield-bearing dollars: **the backing must be independent of the token, professionally managed, and impossible for any one person to move**.

## The parties

| Party                        | Role                                                                                                                                                                                     |
| ---------------------------- | ---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------- |
| **You**                      | Mint, stake, lock and redeem through the contracts. You never send assets to a reserve wallet.                                                                                           |
| **Fund vehicle**             | A dedicated fund that holds the reserve portfolio. Protocol operating cash is kept separate from this vehicle.                                                                           |
| **Asset-management company** | An independent manager — not the engineering team — that allocates, values and confirms the portfolio every day.                                                                         |
| **On-chain approver**        | A second, different person who must approve each daily yield mint. Self-approval is rejected by the contract.                                                                            |
| **Guardian**                 | An independent emergency brake on minting and redemption requests. Resuming those paths requires governance.                                                                             |
| **Reviewers**                | Smart-contract security is covered by [Hashlock](/transparency/security-and-audits.md). Reserve composition and valuation are reviewed on their own track, separate from the code audit. |

No single person can mint yield, move reserves, and operate infrastructure at the same time.

## How the assets are held

Reserves sit in a **dedicated fund structure**, managed by a professional asset-management company that is legally separate from the protocol's engineering and operations. The vehicle is organised under recognised international fund law, with the segregation and duties of care that apply to that structure.

That is the opposite of "treasury on an exchange" or "funds in a developer's wallet":

* **Segregated.** Reserve assets are not mixed with operating expenses or team funds.
* **Independent of the token.** Yield comes from external instruments — government bonds and investment-grade fixed income, typically held to maturity — not from USD8's own price, liquidity, or emissions. The protocol does not loop reserves back into itself.
* **No unilateral movement.** Transfers out of the reserve process require more than one authorised party. Falcon-style: there is no single individual who can re-route the portfolio.
* **Planned liquidity.** The T+7 redemption cooldown exists so the manager can meet redemptions from a liquidity ladder, not by dumping long-duration assets into a bad market.

{% hint style="info" %}
USD8's yield model is closer to the large, reserve-backed dollars (USDT / USDC / USDe) than to leverage-loop or points-as-yield designs: real instruments, marked and confirmed, then delivered on-chain.
{% endhint %}

## How they are valued and reviewed

Two different reviews, on purpose:

| Review                   | What it covers                                                                | Status                                                                    |
| ------------------------ | ----------------------------------------------------------------------------- | ------------------------------------------------------------------------- |
| **Smart-contract audit** | The on-chain mint, stake, lock and distribution machinery                     | Completed by [Hashlock](/transparency/security-and-audits.md)             |
| **Reserve review**       | What the fund holds, how it is valued, and whether it covers USD8 outstanding | Periodic independent review; disclosures published as the protocol scales |

Day to day, the asset-management lead **marks the portfolio and confirms the day's realized return**. That figure is the only input to the on-chain distribution. It cannot reach holders until a second person approves it, the proposal is still within its 24-hour window, and it sits under the distributor's daily mint circuit breaker.

## From the fund to your NAV

```mermaid
sequenceDiagram
    participant Fund as Fund vehicle
    participant AM as Asset manager
    participant P as Proposer
    participant A as Approver
    participant Chain as On-chain distributor
    participant Vault as sUSD8 vault

    Fund->>AM: Portfolio held and marked
    AM->>P: Daily return confirmed
    P->>Chain: Propose
    A->>Chain: Approve (different person)
    Chain->>Vault: Yield minted
    Vault-->>Vault: NAV rises over 8 hours
```

The code enforces the human process: the proposer can never approve their own proposal, either party can veto, stale proposals expire, and a hard cap limits any single day's mint relative to vault assets. See [Stake: sUSD8](/products/stake-susd8.md) for the holder-facing version of the same flow.

## What you can verify today

| Question                         | Where to look                                                                                                          |
| -------------------------------- | ---------------------------------------------------------------------------------------------------------------------- |
| Is every USD8 backed at mint?    | [Mint Vault](/products/mint-and-redeem.md) — one dollar in, one USD8 out, oracle-protected                             |
| Did today's yield actually land? | Public distribution events on the Rewards Distributor                                                                  |
| What is the NAV?                 | ERC-4626 `totalAssets ÷ totalSupply`, also on the [app transparency page](https://app.usd8.ai)                         |
| Who can change parameters?       | [Governance timelock](/transparency/contracts-and-addresses.md) — changes are visible on-chain before they take effect |
| Was the code reviewed?           | [Security & Audits](/transparency/security-and-audits.md)                                                              |

{% hint style="success" %}
**The short version.** Reserves live in a dedicated fund, managed by an independent asset-management company, valued daily, and released on-chain only after a second signature. Smart contracts are audited; the portfolio is reviewed on its own track. No one person can do all three of: manage the assets, approve the mint, and run the infrastructure.
{% endhint %}