> ## Documentation Index
> Fetch the complete documentation index at: https://docs.hermetica.fi/llms.txt
> Use this file to discover all available pages before exploring further.

# Mint

## Overview

**Minting USDh** is the process of creating new stablecoins, while **redeeming USDh** is the process of exchanging these stablecoins for USDC or USDT.

## How USDh is Created

USDh is minted directly through Hermetica. It is issued on Stacks, a Bitcoin Layer 2 network.

Any registered business or individual in an approved jurisdiction who has completed Hermetica's KYC and AML processes can mint USDh by depositing USDC or USDT.

<Check>
  Other users can purchase USDh through open DeFi markets without completing KYC/KYB.
</Check>

## Infrastructure

<Frame caption="Overall Process of USDh">
  <img src="https://mintcdn.com/hermeticalabsinc/cr4cicPK4ZdtyX_c/assets/images/usdh/how-it-works/mint/frame-316125632-1.png?fit=max&auto=format&n=cr4cicPK4ZdtyX_c&q=85&s=92380bddec0070f2ca2edfdd7eb63d5e" alt="Overall Process of USDh" width="1496" height="824" data-path="assets/images/usdh/how-it-works/mint/frame-316125632-1.png" />
</Frame>

All Bitcoin in the protocol is held at institutional-grade custodians [Copper](https://copper.co/) and [Ceffu](https://www.ceffu.com/).

Their off-exchange settlement (OES) solutions allow Hermetica to mirror funds onto the centralized exchanges trading venues, while holding our assets in a bankruptcy remote Trust off of the exchange's balance sheet.

Hermetica trades on the 4 biggest centralized futures exchanges which represent a total of over \$20B in BTCUSD perp open interest. These exchanges are:

1. [Binance](https://www.binance.com)
2. [ByBit](https://www.bybit.com)
3. [Bitget](https://www.bitget.com/)
4. [OKX](https://www.okx.com)

The short perpetual futures position delta-hedges the BTC in the protocol and locks in the dollar value, which is in turn represented on-chain as USDh.

<Info>
  While we currently use the exchanges listed above, we are always exploring new exchange partners to further diversify our dependencies.
</Info>

<Check>
  For more information about our use of institutional custodians and OES providers, please refer to the [Security Mechanisms section](/usdh/how-it-works/security).
</Check>

## Redemptions

Approved Participants may redeem USDh for USDC or USDT via a redemption process that mirrors the minting flow in reverse.

Redemptions may be temporarily paused if one or more of the following conditions are met:

1. **Derivative venue disruption:** Material downtime, halted trading, or impaired settlement on the venues used for hedging that prevents safe unwind or rebalance.
2. **Liquidity dislocation:** Bid–ask spreads or available depth deteriorate to a level where forced unwinds would cause outsized slippage and realized losses for remaining holders.
3. **Collateral or oracle integrity issues:** Loss of reliable price feeds or custody-layer issues that prevent accurate valuation.
4. **Extreme volatility events:** Volatility spikes that cause margin requirements or execution risk to exceed predefined safety thresholds.
5. **Smart contract or security incidents:** Any credible exploit, vulnerability, or abnormal behavior requiring containment.