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Mint

#//todo insert mint transaction schematic

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What does a valid Covenant Mint transaction contain

  • OP_RETURN Output : The OP_RETURN output carries the USD-B rune data—token ID, operation (“MINT”), amount, target output(rune recipient) index and other relevant metadata—in a single unspendable script.

  • Rune Recipient Output : The Rune Recipient UTXO is the transaction output whose address receives and holds the newly minted USD-B runes, linking the OP_RETURN data to the actual token ownership.

  • Collateral Cell : The Collateral Cell is the on-chain Bitcoin output that permanently holds the locked collateral, anchoring USD-B’s value to BTC within the mint transaction. It ensures every minted rune is backed by verifiable Bitcoin locked in this script.

    • Collateral must always be above 200% of the minted USD-B value according to the current oracle price; a recommended collateral ratio of 200% helps protect against price volatility and oracle delays, preventing early liquidation.

    • The collateral amount is sent to a Taproot address protected by the following script.

OP_IF
  <protocol_publicKey>
  <user_publicKey>
OP_ELSE
  <liquidation_agent_publicKey>
  <oracle_publicKey>
OP_ENDIF

  • Fee Output : The fee output is the amount paid by the user to cover protocol fees during the minting process.

  • Protocol Attestation Output : The Protocol Attestation Output is the protocol-funded Bitcoin output included in the mint transaction to cryptographically attest protocol participation and make the mint recognizable to validators and indexers.

  • Change Output: The change output is optional and is used to return any excess Bitcoin collateral back to the user after minting, depending on the transaction specifics.

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How to Mint USD-B tokens

  1. Calculate Collateral Requirement : Query the current BTC/USD price from protocol-approved oracles and determine the Bitcoin collateral required for the desired USDB amount, ensuring the minimum 200% collateral ratio is satisfied.

  2. Prepare Transaction Inputs : The user selects wallet UTXOs to fund the locked collateral, protocol fee, and Bitcoin network fees required for minting.

  3. Construct the Mint Transaction : The mint transaction is assembled using both user-provided inputs and protocol participation. A valid mint transaction must include the OP_RETURN metadata, Rune Recipient Output, Collateral Cell, Fee Output, the protocol-funded Protocol Attestation Output, and any optional change output.

  4. Sign and Broadcast : The user signs the transaction inputs under their control and broadcasts the completed mint transaction to the Bitcoin network for confirmation.

Once confirmed on-chain, USD-B runes become spendable. Covenant indexers and open-source validators scan the transaction and verify that all required outputs, including the Protocol Attestation Output, are present and correctly formed before recognizing the mint as valid.

Making the mint atomic ensures every USD-B token enters circulation only when the collateral lock, rune issuance, protocol fee payment, and protocol attestation are all embedded in the same Bitcoin transaction, preserving solvency, traceability, and protocol integrity.

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Minting Options

Users can mint USDB through the protocol application or SDKs, which coordinate the full mint flow between the user and the protocol, including transaction assembly and inclusion of the Protocol Attestation Output. This is the standard and recommended minting path.

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