> For the complete documentation index, see [llms.txt](https://docs.axis.to/llms.txt). Markdown versions of documentation pages are available by appending `.md` to page URLs; this page is available as [Markdown](https://docs.axis.to/backing-reserves-and-transparency/backing-custody-transparency.md). # Backing, Custody & Transparency Every unit of USDx, the **Axis Dollar**, is backed by a portfolio of assets held by the protocol. Backing does not carry a guarantee, but the objective is to preserve value while generating sustainable revenue across all market conditions. That portfolio is diversified across venues and assets, and its composition is attested cryptographically rather than taken on trust. The strategy pages that follow describe how that revenue is generated; this page describes what backs USDx, where it is held, and how you can evaluate it. USDx originates onchain, but its backing does not stay onchain. USDx is backed by a portfolio of **spot assets** that are held at **centralized liquidity venues** (exchanges and trading venues) rather than in onchain custody. When collateral enters the system it is moved out to these venues, where it backs USDx and supports the trading positions that generate yield. The smart contracts implement issuance and redemption controls, while actual backing at any moment depends on the value, composition, location, liquidity, and hedge status of these offchain assets. The backing portfolio is designed to be relatively stable across most market conditions. It typically holds a large allocation of stablecoins, together with assets that require no hedge to hold, and the remainder in assets that require a hedge, held **delta-neutral**, with an offsetting position that removes directional price exposure. Because a substantial share is stablecoins or otherwise hedged, the portfolio's value is intended to move only modestly as markets move. The system is designed to be **over-collateralized** so that this backing exceeds outstanding USDx; live collateralization is only established by the reserve metrics and Proof of Reserves reporting below, not by this description. Where does the yield come from? Backing assets are deployed into market-neutral strategies whose structural edge is cross-venue and cross-asset fragmentation, a durable yield source that does not rely on any single mechanism. Funding is one component (and can be the larger share in a given period); see the Transparency Dashboard for current attribution. The transparency evidence below is what lets you assess that activity for yourself rather than take it on trust. {% hint style="warning" %} Token supply and custody routes do not by themselves establish a live collateralization ratio or Proof of Reserves. Use the transparency dashboard for current reserve metrics and linked reporting, once published. {% endhint %} ## Transparency dashboard Use the [Axis Transparency Dashboard](https://app.axis.to/transparency) to view the latest published dashboard metrics and its linked Proof of Reserves reporting. Dashboard values are time-sensitive. Review their timestamp, methodology, and underlying evidence when assessing offchain backing. ## What happens during minting Minting settles through the **primary market** (`USDxMarket`). An eligible participant signs an order specifying the supported collateral asset, collateral amount, and USDx amount. An authorized operator submits the order. If the contract checks pass, collateral is transferred to registered custody addresses and USDx is minted. The contract verifies the order and route. It does not use an external price oracle to decide whether the collateral's current US-dollar value is sufficient for the USDx amount in that order. Registered custody addresses are the on-ledger entry point, not the final resting place. From there, **custody of the collateral is transferred out to the various exchanges and trading venues** where the backing portfolio is held and the hedging positions are run. This is what it means for the backing to sit offchain: once collateral leaves the contract, assessing it depends on the offchain evidence described below rather than on onchain state alone. ## Custody and counterparty controls Because the backing is held at external venues, Axis manages the risk that this creates rather than assuming it away. **Why the backing sits on-venue.** Executing the strategy requires liquidity to be positioned on the venues themselves, and inventory is rebalanced across venues multiple times per day. The nature and frequency of that activity make it necessary to hold assets on-venue today. Axis does **not** currently use off-exchange settlement or off-exchange custody; the backing sits at the venues rather than in a segregated off-exchange arrangement. This is a deliberate trade-off, on-venue positioning is what makes the strategy executable, at the cost of the venue exposure described in [Venue & Counterparty Risk](/risk/venue-counterparty-risk.md). **Counterparty and venue selection.** Axis actively manages counterparty and venue risk. It trades only on established, reputable venues, draws on long-standing client relationships with those venues, and applies **counterparty scoring** to assess and monitor exposure to each. **Account whitelisting.** All protocol accounts pass **rigorous, regimented whitelisting policies** before they can be used, as a security and operational control over where assets are permitted to move. ## Independent verification Existence and control of the backing can be verified independently rather than taken on trust. Axis works with **Accountable**, which has **read-only access to the exchange accounts** and can independently **attest the reserves and the accounting methodology** used to value them. Independent verification of this kind lets the existence and control of positions be checked by a third party, alongside the onchain and offchain evidence described on this page. ## What is onchain Users can inspect: * USDx supply and token transfers; * deployed contract code and addresses; * supported-asset and registered-custodian configuration; * privileged roles, configured limits, and contract events; * sUSDx vault assets, shares, exchange rate, and redemption request state (pending and claimable). ## Offchain backing evidence Assessing backing also requires offchain evidence for: * current reserve composition and valuation; * beneficial ownership and availability of custodied assets; * open trading positions, hedge ratios, or unrealized profit and loss; * venue, fund, issuer, or counterparty exposures; * whether every asset can be returned within a particular redemption window; * reconciliation between reserves, liabilities, and USDx supply. Refer to [Audit Reports](/backing-reserves-and-transparency/audits.md) for the smart contract reviews, their scope, and their published reports. ## How to evaluate transparency Evaluate backing using dated reserve composition, liabilities, custody evidence, hedge exposure, collateralization methodology, attestation scope, and reconciliation frequency. Combine the transparency dashboard with onchain supply and contract data; neither view alone captures the entire offchain backing state. Read [How USDx Targets $1](/usdx-the-synthetic-dollar/peg-stability.md) for the economic pathway and [Venue & Counterparty Risk](/risk/venue-counterparty-risk.md) for offchain dependencies. --- # Agent Instructions This documentation is published with GitBook. GitBook is the documentation platform designed so that both humans and AI agents can read, navigate, and reason over technical content effectively. 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