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Live since September 4, 2026. The reserve breakdown — liquid USDG, the vault position and SGOV — is shown on the dUSD page and can be read from the treasury contract directly.
Every dUSD minted at the treasury is matched by at least one dollar of reserve. dUSD minted by the allocator into the lending markets is matched by borrowers’ collateral instead — and both are folded into one system-wide backing check, described below. The treasury’s whole job is deciding where its dollar sits — and the contracts bound every choice it can make.

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The three sleeves

The lending sleeve is one vault that reaches every Denar venue: the Denar USDG vault (a Morpho Vault V2, dnUSDG2) holds the equity markets through the dnUSDG vault and the isolated markets, PONS today, through one adapter each. Where the reserve earns is decided inside that vault, with caps that fall instantly and rise on demand, and the same vault is open to every lender — the stablecoin does not get a private book, it supplies the public one. That is deliberate: every dUSD minted deepens the lending markets. Two consequences are worth knowing. The vault’s own liquidity is measured, not declared: a Morpho Vault V2 does not publish a withdrawable amount, so the treasury’s redemption simply asks for what it needs and the vault either pays or the redemption waits. And the vault leg has a single safety haircut for everything inside it; the exposure to any one collateral is bounded by the vault’s caps instead, with PONS held to at most a fifth of the vault.

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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). 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, and refuses to guess around corporate actions:
  • While the issuer is processing an action (the token’s oracle flag is up) or has one scheduled that the feed does not reflect yet, the treasury neither buys SGOV nor harvests. A reverse split is value-neutral once it lands; a dividend reinvestment is only counted once the feed pays it.
  • Selling SGOV during a pending dividend is allowed, but the floor is lifted to the post-dividend value: the counterparty pays for the reinvestment, or the fill has to fit inside the slippage band. Redemption liquidity is never held hostage to a pay-date.
Either way the error, if any, goes against the treasury’s own surplus, never against holders.

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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 reward drip. The cushion is the part worth reading twice:
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. The harvestable amount is then the smaller of the treasury’s own surplus and the system-wide surplus below, so a hole anywhere in the system stops payouts here. And harvesting is blocked entirely while SGOV has a corporate action pending or in progress, so no distribution is ever minted off a price the issuer has flagged or is about to move.

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System-wide backing

The allocator reports what stands behind the dUSD it minted: its live positions in the lending markets (principal plus accrued interest, net of any socialized bad debt) plus any idle dUSD it holds. The treasury adds that to its own reserve and compares the total to all dUSD in circulation:
  • Nothing is paid beyond the system-wide surplus, by either contract. The treasury harvests at most the smaller of its own and the system surplus; the allocator distributes at most the system surplus and keeps the rest as backing. A loss in a lending market does not reach sdUSD as a distribution and then leave dUSD holders to carry it: income refills the hole first.
  • The check itself never fails closed by accident. The system views never revert: a reserve that cannot be valued because the feed is stale, or a source that cannot answer, counts as zero backing — which only ever tightens the cap — so a dead feed can never block a lending-market exit.
  • The allocator keeps a loss reserve first. A configurable amount of harvested interest stays idle in the allocator before anything is split. Idle dUSD is dUSD the system owes to itself, so it nets a write-down the moment one happens, and it can be burned against the allocator’s bucket — only up to the loss already recognised — to make the loss explicit.
  • Unregistered dUSD counts as unbacked. Only facilitators the owner has registered report backing; anything else can only shrink harvests, never inflate them.

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The price feed

Three inputs could inflate the reserve’s value: the SGOV/USD feed, the lending vault (its share price is self-reported) and the swap routes. Once dUSD is outstanding all three change slowly: a replacement is proposed, waits one day, must still be applied within three, and dies with an ownership change. Dropping a route, adjusting caps, and wiring at deploy time stay instant. Should the feed ever die — deprecated by Chainlink, or stale for a week beyond its normal tolerance — the owner may sell SGOV with an explicit floor through the same allow-listed routers, so the T-bill sleeve can never be stranded behind a dead oracle.

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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.
dUSD the allocator lends out is backed by that market’s collateral at up to its LLTV. Bad debt there is written down at the allocator, covered first by its loss reserve, and — while any of it is uncovered — stops every distribution in the system. Per-market caps keep the exposure small relative to the treasury’s cushion.
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, the retained cushion and the system-wide gate exist to keep that state unreachable.