Validation & Security

Delta Money: Pre-Execution Validation and Risk Controls for DUSD Minting & Redemption

o uphold the stability of the DUSD ecosystem and ensure secure, transparent, and fair execution, Delta Money performs a series of rigorous pre-execution validations. These are designed to confirm that both the user and the protocol are in a position to honor the signed mint or redemption order before it is finalized and broadcast to the blockchain.

Once a user initiates a DUSD minting or redemption request and signs the associated order with their verified wallet, Delta Money retains a "last-look" safeguard mechanism. This step allows Delta to validate that the agreed-upon execution terms remain within pre-defined risk and pricing tolerances at the moment of final submission.

This mechanism serves multiple institutional objectives:

1

Protecting the Protocol

In volatile market conditions, Delta ensures that minting or redemption would not lead to unhedged exposure or protocol losses. Real-time pricing, liquidity conditions, and hedge execution availability are assessed before finalization.

2

Safeguarding Users

Users benefit from consistent execution quality and protection from slippage or mispricing that may occur in the brief window between quote generation and blockchain submission.

3

Ensuring Market Integrity

Delta’s internal and external pricing oracles, along with real-time risk engines and hedging systems, must confirm that the transaction is viable, correctly collateralized, and hedgeable within established thresholds.

In circumstances where conditions have materially changed — for instance, due to sharp market moves, liquidity dislocations, or failed hedging attempts — Delta reserves the right to decline execution of the signed order. This ensures that DUSD remains reliably backed, protocol solvency is preserved, and the user is never exposed to unfavorable or unpredictable outcomes.

Validation Framework for Crypto-Based DUSD Minting via Delta Money

Control Check	Operational Detail	Risk Mitigation Objective
KYC/KYB Verification	The user’s identity has been verified through Delta Money’s KYC/KYB process and their wallet address is whitelisted.	Ensures only compliant, verified users can interact with minting protocols.
Cryptographically Valid Signature	The user submits a cryptographically valid signature through their whitelisted wallet.	Confirms secure authorization of the mint request and links the action to the verified user.
System Health Check	Internal systems (pricing, hedging, risk engine, allocation routing) are verified to be operational.	Confirms the platform is capable of executing all required actions safely and atomically.
Asset Type Validation	The submitted asset is among accepted mint assets: stablecoins (USDT, USDC, USDS), yield-bearing stables (sUSDS, USTB), or volatile crypto (BTC, ETH, BNB, SOL).	Prevents unsupported or risky assets from entering the minting workflow.
Sufficient Balance & Approval	The user has approved the Delta Money smart contract to access the asset and has a sufficient balance to complete the transaction.	Avoids transaction failures due to underfunding or missing token approvals.
RFQ and Order Match	The amounts and asset types in the user’s signed mint request exactly match the Request for Quote (RFQ) response.	Ensures consistency and transparency between the quoted and submitted parameters.
Order Expiration Check	The signed mint order includes an expiration time that is at least 30 seconds into the future.	Provides a buffer to accommodate network latency and varying gas environments.
Timely Order Submission	The order is returned within the allowed time window following the RFQ.	Maintains pricing relevance and prevents stale execution.
Stablecoin Liquidity Allocation	For standard or yield-bearing stablecoins, the capital is allocated into Delta’s risk-adjusted reserve framework.	Ensures liquidity is managed according to safety, yield, and exposure profiles.
Volatile Asset Hedging Setup	For BTC, ETH, BNB, and SOL, Delta opens short perpetual futures on leading exchanges immediately after deposit confirmation.	Fully hedges price exposure to maintain a 1:1 peg and isolate protocol risk.
Exchange Venue Check	Delta routes the hedge trade to the most cost-efficient and liquid centralized or decentralized venue.	Minimizes costs and slippage during hedging, and ensures robust execution quality.
Oracle-Based Price Sanity Check	Validates that the asset valuation used for the mint is in line with external sources (e.g. Chainlink, Pyth, Redstone).	Ensures integrity of pricing mechanisms and protects against manipulation or anomalies.
Reserve Allocation Rebalancing	Post-mint, the reserve pool is rebalanced to maintain target exposure levels and risk-adjusted diversification.	Sustains long-term solvency, liquidity, and safety of DUSD backing assets.
Block Volume Cap Check	Verifies that the mint request does not exceed the defined per-block cap for crypto-based minting.	Supports protocol stability and manages systemic liquidity risk.
Single Mint Order Per Block	Ensures only one mint request per user per block is processed.	Prevents spam, simplifies transaction tracking, and ensures fair access to protocol services.

Validation Framework for Fiat-Based DUSD Minting via Delta Money

Control Check	Operational Detail	Risk Mitigation Objective
KYC/KYB Verification	The user has completed the required KYC/KYB procedures and is whitelisted to mint DUSD via fiat.	Ensures regulatory compliance and authorized access to fiat-based minting services.
Bank Account Whitelisting	The user's sending bank account has been verified and is linked to their Delta Money account.	Prevents fraud, ensures origin of funds is traceable and compliant.
Cryptographically Valid Signature	A valid signature from the user is submitted via their verified digital wallet.	Confirms that the request is securely authorized and linked to the correct user.
System Health Check	Internal systems for pricing, fiat settlement, and asset allocation (bonds, repos, etc.) are verified to be fully operational.	Ensures Delta Money can properly process the request and allocate funds as intended.
Receipt Confirmation	Fiat transfer from the user is confirmed in Delta Money's receiving bank accounts.	Prevents premature minting; DUSD is only minted upon confirmed receipt of funds.
Fiat Liquidity Allocation Check	Confirms that the amount received in fiat is eligible for allocation to short-term government bonds, repo agreements, or USD cash positions.	Guarantees that DUSD minting is fully backed by secure, liquid instruments.
Non-USD Currency Hedging Setup	For CHF, BRL, and KZT deposits, Delta Money initiates hedging via FX forwards, futures, or options contracts on traditional finance venues.	Ensures all non-USD exposure is neutralized, maintaining the USD peg of DUSD.
Order Expiration Check	Ensures the mint request terms (including FX conversion rates) are still valid and not expired at the time of execution.	Prevents stale orders from being executed at outdated or invalid pricing.
Rate Lock Confirmation	Confirms that the user-approved FX rate or spread at time of quote has been locked for conversion and hedging purposes.	Avoids rate slippage and maintains transparency in the minting process.
AML/Fraud Screening	Incoming fiat funds are screened using AML systems and monitored for suspicious activity.	Ensures compliance with anti-money laundering regulations and mitigates illicit use.
Block Capacity Check	Validates that the fiat minting volume does not exceed current capacity limits defined for protocol and liquidity risk management.	Maintains systemic stability and prevents overexposure in specific currencies.
Single Pending Order Check	Ensures that the user does not have another unresolved fiat mint or redemption request in progress.	Prevents duplication, ensures orderly processing, and simplifies reconciliation.