dbis_core/docs/flows/cbdc-mint-burn-flow.md

CBDC Mint Burn Flow

Overview

CBDC minting and burning operations ensure 1:1 reserve backing for all CBDC issuance. This flow documents the complete process from reserve verification through ledger posting for both minting (issuance) and burning (redemption) operations.

Prerequisites

• Sovereign bank is registered and active
• Treasury account exists for the sovereign bank
• Reserve account has sufficient balance (for minting)
• Valid operator identity
• CBDC service operational

Visual Flow Diagram

Minting Flow

┌─────────────┐
│ Mint Request│
└──────┬──────┘
       │
       │ 1. Verify Reserve
       ▼
┌─────────────────────────┐
│ Verify 1:1 Reserve       │
│  Backing                 │
│  - Check reserve balance │
│  - Verify >= mint amount │
└──────┬──────────────────┘
       │
       │ 2. Reserve OK
       ▼
┌─────────────────────────┐
│ Create Issuance Record  │
│  - Record ID            │
│  - Amount minted         │
│  - Operator identity     │
│  - Reserve backing       │
└──────┬──────────────────┘
       │
       │ 3. Post to Ledger
       ▼
┌─────────────────────────┐
│ Ledger Posting          │
│  - Debit: Treasury       │
│  - Credit: CBDC wallet   │
│  - Type: TYPE_B          │
└──────┬──────────────────┘
       │
       │ 4. Complete
       ▼
┌─────────────┐
│ CBDC Minted │
└─────────────┘

Burning Flow

┌─────────────┐
│ Burn Request│
└──────┬──────┘
       │
       │ 1. Create Record
       ▼
┌─────────────────────────┐
│ Create Issuance Record  │
│  - Record ID            │
│  - Amount burned        │
│  - Operator identity     │
└──────┬──────────────────┘
       │
       │ 2. Post to Ledger
       ▼
┌─────────────────────────┐
│ Ledger Posting          │
│  - Debit: CBDC wallet    │
│  - Credit: Treasury      │
│  - Type: TYPE_B          │
└──────┬──────────────────┘
       │
       │ 3. Release Reserve
       ▼
┌─────────────┐
│ CBDC Burned │
└─────────────┘

Step-by-Step Process

Minting Process

Step 1: Reserve Verification

1. Receive mint request with:
   • Sovereign bank ID
   • Wallet ID (optional)
   • Amount to mint
   • Operator identity
   • Reason (optional)
2. Get treasury account for sovereign bank:
   • Lookup accounts by sovereign bank ID
   • Filter by account type: treasury
   • Filter by currency: OMF (reserve currency)
3. Check reserve balance:
   • Get current balance
   • Compare with mint amount
   • Verify: reserveBalance >= mintAmount
4. If insufficient reserve, throw error: "Insufficient reserve backing for CBDC minting"

Code Reference: src/core/cbdc/cbdc.service.ts:22-136

Step 2: Create Issuance Record

1. Generate unique record ID: CBDC-MINT-{uuid}
2. Create CBDC issuance record:
   • Record ID
   • Sovereign bank ID
   • Wallet ID (if provided)
   • Amount minted: amount
   • Amount burned: 0
   • Net change: amount
   • Operation type: MINT
   • Operator identity
   • Reserve backing: amount (1:1 backing)
   • Timestamp: current UTC time
   • Metadata: reason if provided
3. Store record in database

Code Reference: src/core/cbdc/cbdc.service.ts:38-52

Step 3: Ledger Posting

1. Get treasury account (same as Step 1)
2. Determine ledger ID: {sovereignBankId}-CBDC
3. Post double-entry to ledger:
   • Debit account: Treasury account ID
   • Credit account: Treasury account ID (simplified - in production would be CBDC wallet)
   • Amount: amount
   • Currency: OMDC (CBDC currency code)
   • Asset type: CBDC
   • Entry type: TYPE_B (CBDC issuance)
   • Reference ID: record ID
   • Metadata: { operationType: 'mint', walletId, reason }
4. Verify ledger entry created successfully

Code Reference: src/core/cbdc/cbdc.service.ts:54-67

Step 4: Return Result

1. Map issuance record to CbdcIssuance type
2. Return issuance details:
   • Record ID
   • Amount minted
   • Reserve backing
   • Timestamp

Code Reference: src/core/cbdc/cbdc.service.ts:69

Burning Process

Step 1: Create Issuance Record

1. Receive burn request with:
   • Sovereign bank ID
   • Wallet ID (optional)
   • Amount to burn
   • Operator identity
   • Reason (optional)
2. Generate unique record ID: CBDC-BURN-{uuid}
3. Create CBDC issuance record:
   • Record ID
   • Sovereign bank ID
   • Wallet ID (if provided)
   • Amount minted: 0
   • Amount burned: amount
   • Net change: -amount (negative)
   • Operation type: BURN
   • Operator identity
   • Timestamp: current UTC time
   • Metadata: reason if provided
4. Store record in database

Code Reference: src/core/cbdc/cbdc.service.ts:75-101

Step 2: Ledger Posting

1. Get treasury account for sovereign bank
2. Determine ledger ID: {sovereignBankId}-CBDC
3. Post double-entry to ledger:
   • Debit account: Treasury account ID (CBDC wallet - simplified)
   • Credit account: Treasury account ID (Treasury - simplified)
   • Amount: amount
   • Currency: OMDC
   • Asset type: CBDC
   • Entry type: TYPE_B (CBDC redemption)
   • Reference ID: record ID
   • Metadata: { operationType: 'burn', walletId, reason }
4. Verify ledger entry created successfully

Code Reference: src/core/cbdc/cbdc.service.ts:103-116

Step 3: Return Result

1. Map issuance record to CbdcIssuance type
2. Return issuance details:
   • Record ID
   • Amount burned
   • Net change
   • Timestamp

Code Reference: src/core/cbdc/cbdc.service.ts:118

Error Handling

Error: Insufficient Reserve Backing

• Detection: Reserve balance < mint amount
• Action: Throw error "Insufficient reserve backing for CBDC minting"
• Recovery: Add reserves, retry minting

Error: Treasury Account Not Found

• Detection: No treasury account found
• Action: Throw error "Treasury account not found"
• Recovery: Create treasury account, retry

Error: Ledger Posting Failure

• Detection: Ledger service returns error
• Action: Rollback issuance record, throw error
• Recovery: Verify ledger service, retry

Error: Invalid Amount

• Detection: Amount <= 0
• Action: Throw validation error
• Recovery: Correct amount, retry

Integration Points

Related Services

• CBDC Service: src/core/cbdc/cbdc.service.ts
• Account Service: src/core/accounts/account.service.ts
• Ledger Service: src/core/ledger/ledger.service.ts
• CBDC Wallet Service: src/core/cbdc/cbdc-wallet.service.ts

API Endpoints

• POST /api/v1/cbdc/mint - Mint CBDC
• POST /api/v1/cbdc/burn - Burn CBDC
• GET /api/v1/cbdc/issuance/:recordId - Get issuance record

Database Models

• CbdcIssuance - CBDC issuance records
• CbdcWallet - CBDC wallet records
• BankAccount - Treasury accounts

Performance Metrics

• Reserve Verification: < 20ms target
• Record Creation: < 10ms target
• Ledger Posting: < 50ms target
• Total End-to-End: < 80ms target
• Throughput: 5,000+ operations/second
• Availability: 99.99% uptime target

Security Considerations

Reserve Backing

• 1:1 reserve backing enforced
• Reserve balance checked before minting
• Reserve backing recorded in issuance record

Operator Identity

• Operator identity required for all operations
• Identity logged in issuance record
• Audit trail for all mint/burn operations

Authorization

• Only authorized operators can mint/burn
• Sovereign bank must be active
• Treasury account must exist

Testing Scenarios

Happy Path - Minting

1. Valid mint request
2. Sufficient reserve balance
3. Successful record creation
4. Successful ledger posting
5. CBDC minted

Happy Path - Burning

1. Valid burn request
2. Successful record creation
3. Successful ledger posting
4. CBDC burned

Error Scenarios

1. Insufficient reserve backing
2. Treasury account not found
3. Ledger posting failure
4. Invalid amount
5. Invalid operator identity

Edge Cases

1. Maximum mint amount
2. Minimum mint amount
3. Mint with zero amount (should fail)
4. Burn more than available
5. Concurrent mint/burn operations

---

Related Flows:

• CBDC Wallet Transfer Flow
• CBDC Interoperability Flow
• GSS Settlement Flow