CuBit™ Cryptocurrency Minting and Burning
Minting and Burning of CuBit™ Cryptocurrency
The minting and burning of CuBit™ cryptocurrency are important controls to protect your wealth. They affect the monetary supply of CuBit™ and therefore affect its value. In this context minting and burning are terms of science in blockchain technology.
What are minting and burning?
Minting is the process of creating new blockchain contracts or tokens. Burning is the process of destroying or cancelling existing blockchain smart contracts or tokens. When a person acquires a token, an instance of the smart contract with the specifics of the transaction are created on the blockchain.
Virtual Currency Contracts
CuBit™ uses an ERC-20 compliant Ethereum contract. When you exchange money for CuBit™ you are depositing your money into the CuBitDAO™ (the DAO) treasury through a copy of the contract that is specifically linked to your crypto wallet. Regardless of the wallet owner, all CuBit™ contracts have a common structure and certain important information which affects the value of your wealth.
The Coin Cap, Minting Authorization, Burning Limit, Supply, Reserves, and Circulation are the key elements informing the monetary supply of CuBit™.
Cryptocurrency Minting – Coin Cap
The Coin Cap indicates the maximum possible amount of CuBit™ which is believed to be needed to serve the real estate market within the USA. Changing the Coin Cap requires a vote from the DAO. If the Coin Cap works as intended, increasing the Coin Cap will be closely associated with a vote to expand the real estate focus of the DAO (Area of Operations) beyond the USA.
The Coin Cap and the Area of Operations limits protects DAO Members from mindlessly minting more CuBit™ and eroding your wealth through inflation.
Minting Authorization Limit
The Minting Authorization indicates the maximum possible amount of CuBit™ which can be minted by the Company without requiring a vote from the DAO. This is a boundary the DAO imposes on the Company, not a mandate. In other words, the Company has permission to mint up to this amount of CuBit™, but it is not required to mint that amount. This is another limit protecting DAO Members from losing their wealth to inflation through the uncontrolled creation of currency supply.
Supply
The supply of CuBit™ (Supply) is the total amount of CuBit™ which has been minted to-date and not burned. The Supply is the sum of CuBit™ Reserves (Reserves) and CuBit™ Circulation (Circulation). The Supply cannot exceed the current Minting Authorization. When Supply is approaching the Minting Authorization level, the Company will propose to the DAO to increase the Minting Authorization in preparation for the next round of DAO expansion and wealth protection for more Members.
Reserves
CuBit™ Reserves is CuBit™ which has been minted but which has not been issued to a Member in receipt of Member deposits. Reserves are held in the custody of the Company on behalf of the DAO. When Reserves run low, the Company may mint more CuBit™ as long as the Supply remains at or below the current Minting Authorization level.
Circulation
Circulation indicates how much CuBit™ is currently issued to Members in receipt for their deposits. The total value of the assets in the Asset Ledger is divided by the Circulation to show the value of a single CuBit™. We translate that value into USD, ETH, and BTC to show a reasonable, value-driven, exchange rate.
The CuBit™ Contract
Minting, authorized under the Minting Authorization level, increases Supply by increasing Reserves. However, minting does not impact Circulation until it is moved from Reserves to Circulation (within Supply). The CuBit™ smart contract (Coin Contract) allows for minting and burning of CuBit™. However, those functions are only available for use by the Administrator (Admin). The Company is the current Admin.
Because of the nature of blockchain technology, when the Coin Contract is changed e.g., by increasing the Coin Cap, the change is visible to all who hold CuBit™ when they attach their wallet to the blockchain for any purpose.
When we mint CuBit™ the newly minted CuBit™ is moved to the Reserves wallet. When the CuBit™ Exchange, operated by the Company receives a deposit CuBit™ is transferred from the Reserves to the depositor and the Circulation field in the Asset Ledger is incremented.
Technically, the deposit is made into the Exchange smart contract. Then the CuBit™ is deposited into the Exchange smart contract. When the contract detects the success of both of these inputs, it then releases the deposit to the DAO and release the CuBit™ to the DAO Member. This simplified explanation leaves out the regulatory compliance steps in the process. Successful completion of those regulatory requirements is part of the contract and funds are not released to anyone until the terms of the contract are met. If the contract times out without successful fulfillment of its terms, it reverts the deposit to the depositor and the CuBit™ to the DAO (Revert).
Burning CuBit™
When the US Treasury burns currency to take it out of circulation, they literally put it into an incinerator and torch it. Burning CuBit™ moves a quantity of CuBit™ from the Company wallet into a specialized wallet. This specialized wallet is like a crypto version of a black hole. What goes in never comes out. When CuBit™ goes into this black hole, it is burned. This decreases the Supply. Burning is usually a deflationary event, meaning it protects the value of the remaining CuBit™ in circulation.
The US Treasury Department does it too
These processes regarding minting and burning CuBit™ are directly analogous to the actions of the US Treasury printing (minting) new dollars or tossing old bills into an incinerator to burn them. For the US Dollar these actions change the money supply. When we do this with CuBit™ it changes the Supply of CuBit™.
Who can burn CuBit™?
Burning of already minted CuBit™ directly affects the Supply of CuBit™. However, unless the order to burn CuBit™ is also accompanied by a change to the Minting Authorization or Coin Cap burning does not automatically affect the potential supply of CuBit™. Only the Admin is authorized to burn CuBit™. The DAO gives the Admin a Burn Limit. Ordinarily, the Burn Limit is set to zero. If the DAO votes to burn CuBit™, they will specify an amount to be burned by changing the Burn Limit for the Admin.
Reserves will be burned first. If the amount of Reserves is not sufficient to fulfill the Burn Limit, the Company will need to buy back CuBit™ from Members and then burn the CuBit™ received in place of the returned deposits. Buy backs will decrease the assets of the DAO.
Buying back CuBit™ isn’t the same as burning it. CuBit™ that is bought back goes into the Reserves because it no longer is a liability receipt offset by a deposit.
Lighting the Match
If we need to burn CuBit™, the Company will submit a proposal to the DAO. The proposal will specify the amount of CuBit™ we recommend burning. The DAO can accept or reject the proposal. If they accept it, the Company uses DAO assets to buy back the specified amount of CuBit™ and burns it, along with sufficient Reserves to meet the Burn Limit. Under some circumstances, burning could decrease the value of CuBit™.
Assets or Liabilities
All CuBit™ which has not been issued in receipt of deposits is a potential liability. CuBit™ issued in receipt of deposits is a real liability.
Deposits are assets, offset by the liability of issued CuBit™. All deposits are liquid assets (LA) when received by the DAO. Once in the DAO treasury, the Admin is able to convert a portion of the LA into real estate (RE) assets. While the value of the LA and RE assets (absent additional deposits) may change, the amount of CuBit™ offsetting those assets remains constant. Thus, it is the changing value of those assets that changes the value of CuBit™.
Who can mint CuBit™?
The DAO Administrator (currently the Company) is the only entity authorized by the DAO to mint CuBit™. The limit to what the Company can mint is the Coin Cap. If the Company wants to mint more CuBit™ than the Minting Authorization currently allows, the DAO will have to vote to increase the Authorization.
Conclusion
The DAO holds the controls over the supply of CuBit™. DAO controls of the supply of CuBit™ begin with the Coin Cap, then the Minting Authorization Limit, and conclude with the Burn Limit. The Administrator has a reasonable level of autonomy within those limits. The Administrator Contract, the Asset Ledger Contract, and Coin Contract all work together to programmatically enforce the DAO limits on the Admin. As the Admin, the Company is committed to take all reasonable actions to further the objectives of the DAO, within the limits allowed by the DAO.
Glossary: CuBit™ Glossary
About the Author: CuBit™ Roots
Disclaimers
This does not constitute an offer to sell or buy a security. Any such offer would be accompanied by all legally required documentation. CuBit™ is a receipt currency. Distributed Regional Affiliates shares are regulated under the securities laws of the United States of America.
Although the design of CuBit™ incorporates inherent protections against volatility and Universal Real Estate Wealth Protection Solutions™, LLC (UREWPS™, the Company) is committed to support the asset-based valuation of CuBit™, as with any currency there is nothing to prevent speculators from taking unforeseen actions which might cause the price of CuBit™ to vary without reference to the underlying value proposition. The Company cannot prevent and is not responsible for the actions or results of such speculative behaviors.
CuBit™ may lose value. Deposits in CuBit™ are not insured by the FDIC or any other entity. CuBit™ is not a bank product.
The graphics utilized the Universal Real Estate Wealth Protection Solutions, LLC™ (UREWPS™) and CuBitREvolution™ websites and in the Company and product documentation include both AI-generated images and licensed content sourced from Deposit Photos and Shutterstock via TechSmith. While we strive to ensure the accuracy and relevance of all visuals, all graphics are intended for illustrative purposes and may not fully reflect actual products or services. The use of AI in graphic creation is subject to limitations, and we encourage users to verify information independently. The company disclaims any liability for decisions made based on the content provided. For specific inquiries or further information, please contact us directly.