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There are two primary methods of custoding BTC:
  1. Native Bitcoin custody (default): Every Series holds BTC in a dedicated Taproot Vault using threshold Schnorr signatures. The vault looks like a single-sig on-chain but requires an m-of-n operator quorum to move funds (Custody, Validation, Governance). This structure prevents rehypothecation and keeps each Series isolated. uBTC receipts are minted/burned only after the Bitcoin transaction is proof-gated (confirmed on the BTC network), keeping token supply 1:1 with coins verifiably in custody.
  2. Prime-custodian flow (optional): If a borrower or lender prefers a qualified custodian (e.g., BitGo), Nexio supports a segregated, whitelisted sub-account model. Deposits, draws, and repayments still route through the Series’ control logic and execute only after on-chain compliance attestations and proof-gated events, preserving the same no-rehypothecation and ring-fencing guarantees.
Nexio 7th Graphic Bitcoin Signature2 Jp

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Model 1: Native Bitcoin Custody

BTC within Nexio is secureProgrammatic diversification via the Master Vault across vetted borrowers and strategies. d in Taproot Vaults: specialized Bitcoin addresses governed by threshold Schnorr signatures. This structure provides institutional-grade security and flexibility natively on Bitcoin, with no wrapped assets or off-chain custody. When a lender deposits BTC, it moves directly into either a Series Vault or the Master Vault. Borrowers draw and repay within the same native Bitcoin environment, while lenders receive uBTC or yBTC to represent their verifiable on-chain position. Each Nexio Vault implements a Taproot tree containing three predefined spending conditions, each representing a separate operational path. These include:
  • Normal Path: Standard operations (e.g., borrower draws or lender redemptions) executed through authorized signers and verified by the Operator Queue.
  • Reclaim Path: Allows governance to recover funds if operations halt or a borrower defaults safely.
  • Emergency Path: Enables all three operators (Custody, Validation, and Governance) to co-sign an emergency transaction that moves BTC to a secure recovery vault in case of systemic compromise.
This architecture delivers cold-storage-grade safety with on-chain automation. Each Series is assigned its own Taproot Vault, keeping capital isolated and preventing any cross-Series exposure or rehypothecation.

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2. Prime-Custodian Flow

If a lender or borrower prefers a regulated custodian, Nexio supports a segregated, whitelisted sub-account model:
  • BTC is held in a qualified custodian’s segregated account
  • Sub-accounts are mapped 1:1 to Series
  • Draws, deposits, and repayments still route through Series logic
  • The Operator Queue still verifies all Bitcoin transactions
  • uBTC/yBTC only mint/burn after proof-gated confirmation
  • Same no-rehypothecation and ring-fencing guarantees apply
This model allows regulated institutions to use Nexio while maintaining existing custody relationships.

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Schnorr Signatures

Schnorr signatures, introduced with Taproot, let multiple entities collaboratively produce a single aggregated signature that appears identical to a normal one. This makes Nexio’s multi-party authorization invisible to external observers while reducing fees and transaction size. It works as follows:
  1. Each signer generates a private/public key pair. These keys are aggregated into one group public key.
  2. When spending BTC, each participant signs partially. These partial signatures are aggregated into one unified signature.
  3. Bitcoin validates it as a single-sig spend, making it indistinguishable from a normal wallet.
This aggregation provides threshold logic. To move BTC, Nexio requires m-of-n designated operators to co-sign any transaction.