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Proof Gating links every on-chain action to a confirmed Bitcoin transaction, ensuring that Nexio’s tokenized supply (uBTC and yBTC) always matches the Bitcoin verifiably held in custody. Minting, burning, and redemption only occur after the system receives a valid proof from the Bitcoin network confirming that the corresponding transaction has settled. In other words, no uBTC or yBTC moves until confirmed on the Bitcoin network, guaranteeing a one-to-one relationship between on-chain receipts and real BTC in vault custody.

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How Proof Gating Works

Before any mint or burn proposal executes, the Operator Queue verifies a cryptographic proof of the corresponding Bitcoin transaction. This proof must show that the transaction:
  • Has reached the required number of confirmations.
  • Originates from a whitelisted Series or Master Vault address.
  • Matches the expected input and output values.
Only after these checks pass does the smart-contract layer approve the on-chain action, such as authorizing a Bitcoin payout. This process enforces deterministic reconciliation between Bitcoin custody and on-chain supply. There are 3 key steps:
  1. **Deposit Proof: **When a lender sends BTC to a Series vault, the Operator Queue waits for the configured confirmation threshold (e.g., 3 blocks). Once verified, a proof is submitted to the contract, which mints the corresponding uBTC.
  2. Burn Verification: When a lender redeems BTC, uBTC is burned first on Nexio’s on-chain layer. The Operator Queue validates this burn event before releasing the signed PSBT to return Bitcoin from the vault.
  3. Continuous Reconciliation: Every mint, burn, or redemption updates the vault’s values to keep the two ledgers perfectly aligned.
Below is an example to help illustrate this. 9thimage Jp

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Example: Proof Gating

Imagine a lender deposits 2 BTC into a 90-day Series vault.
  • After 3 confirmations on the Bitcoin Network (each confirmation is ~10 minutes), the Operator Queue receives proof of the deposit.
  • The system validates the input, address, and amount, then mints uBTC at the current BTC/uBTC price.
  • If the lender later redeems, their uBTC are first burned on-chain, and only then is the system co-signed to release their 2 BTC (plus accrued yield).
This ensures that the uBTC supply never exceeds the BTC verifiably held in custody.