> For the complete documentation index, see [llms.txt](https://docs.nara.io/llms.txt). Markdown versions of documentation pages are available by appending `.md` to page URLs; this page is available as [Markdown](https://docs.nara.io/nara-protocol/how-nara-works.md). # How Nara works **Nara converts short-duration payment financing into on-chain dollar yield through two tokens and one vault.** NaraUSD is the base synthetic dollar. NaraUSD+ is the staked share of the vault that holds the financing portfolio. Everything in between (minting, allocation, valuation, unstaking, redemption) is either an on-chain event or an off-chain process whose result is written on-chain under enforced limits. ### The system | Participant | Role | | --------------------------------------- | ----------------------------------------------------------------------------------------------------------- | | Authorized Users | KYC/KYB-verified addresses that mint and redeem NaraUSD at the primary market | | Holders | Anyone who holds, stakes, unstakes or trades NaraUSD and NaraUSD+ | | Nara Finance Management Corp. | Issuer of NaraUSD and NaraUSD+; deploys reserves into approved positions under the allocation policy | | Investment Committee | Three members; unanimous approval required before any position is funded | | Origination partners and asset managers | Payment companies and regulated managers that originate or manage the financed flows | | Valuation operators | Calculate NAV off-chain and pass it through maker → reviewer → executor before the exchange rate is updated | | 3-of-5 multisig signers | Hold every privileged key | | The public | Verify supply, exchange rate, queue state and admin actions directly from chain state | ### Lifecycle | Step | What happens | Where it is recorded | | ----------- | ------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------ | --------------------------------------- | | 1. Mint | An Authorized User deposits eligible stablecoins and receives NaraUSD 1:1. KYC gating and per-block mint limits are enforced in the contract. | On-chain mint event | | 2. Allocate | Backing is split between the liquid reserve (20% to 35% target) and payment-financing positions (55% to 75%), with up to 15% in approved strategic positions. Deployments execute only against an allowlist of approved targets and calls. | On-chain vault transfers; dashboard | | 3. Earn | Borrowers and positions pay premiums. Realized income returns to the vault. | Position reporting; dashboard | | 4. Value | NAV is calculated off-chain, verified through three stages, and written on-chain as the NaraUSD+ exchange rate. Reward issuance cannot exceed the on-chain unbacked-mint cap. | On-chain rate update; immutable history | | 5. Stake | Any NaraUSD holder deposits into the staking vault and receives NaraUSD+ at the current rate. Permissionless. | On-chain | | 6. Unstake | The holder requests unstaking. After a 7-day cooldown, NaraUSD+ is burned and NaraUSD is returned at the prevailing rate. | On-chain request and fulfilment | | 7. Redeem | An Authorized User redeems NaraUSD for stablecoins. Instant if within the liquid buffer; otherwise queued and targeted within 7 days as positions roll off. | On-chain queue, ordered and public | ### Exit paths and timing There are three ways out, and they differ in who can use them, how long they take and what price they clear at. | Path | Who | Time | Price | | --------------------------------- | ---------------- | ----------------------------------------------------------------------------- | ----------------------------------------------------------------------- | | Unstake NaraUSD+ → NaraUSD | Anyone | 7-day cooldown, then claim | Vault exchange rate at claim | | Redeem NaraUSD → stablecoin | Authorized Users | Instant within the liquid buffer; queued and targeted within 7 days otherwise | 1:1 | | Sell NaraUSD or NaraUSD+ on a DEX | Anyone | Immediate | Market price, which can deviate from the exchange rate or from a dollar | #### Normal conditions NaraUSD+ to stablecoins through the primary route takes up to 14 days: 7 days of cooldown plus up to 7 days in the redemption queue. Requests that fit the liquid buffer clear the second leg instantly. #### Under sustained redemption pressure The 7-day redemption target is best effort. If requests exceed the liquid buffer for an extended period, the queue is served in order as positions roll off. The longest position terms in the current book are mGlobal's 35-day standard redemption and Zynk's 30-calendar-day withdrawal notice after its 2-month minimum holding period; Nara's policy maturity limit is a 30 to 90-day average portfolio liquidity excluding the reserve. Plan for up to about 90 days in the worst case. Nara reports redemption stress tests at 20%, 30% and 50% of supply as operating data supports them; see Risks. #### What is public Unstaking requests, redemption requests, queue order and fulfilments are on-chain events. Redemption throughput under stress is therefore a public record rather than a claim. | Path | Who | Time | Price | | --------------------------------- | ---------------- | ----------------------------------------------------------------------------- | ----------------------------------------------------------------------- | | Unstake NaraUSD+ → NaraUSD | Anyone | 7-day cooldown, then claim | Vault exchange rate at claim | | Redeem NaraUSD → stablecoin | Authorized Users | Instant within the liquid buffer; queued and targeted within 7 days otherwise | 1:1 | | Sell NaraUSD or NaraUSD+ on a DEX | Anyone | Immediate | Market price, which can deviate from the exchange rate or from a dollar | #### Normal conditions NaraUSD+ to stablecoins through the primary route takes up to 14 days: 7 days of cooldown plus up to 7 days in the redemption queue. Requests that fit the liquid buffer clear the second leg instantly. #### Under sustained redemption pressure The 7-day redemption target is best effort. If requests exceed the liquid buffer for an extended period, the queue is served in order as positions roll off. The longest position terms in the current book are mGlobal's 35-day standard redemption and Zynk's 30-calendar-day withdrawal notice after its 2-month minimum holding period; Nara's policy maturity limit is a 30 to 90-day average portfolio liquidity excluding the reserve. Plan for up to about 90 days in the worst case. Nara reports redemption stress tests at 20%, 30% and 50% of supply as operating data supports them; see Risks. #### What is public Unstaking requests, redemption requests, queue order and fulfilments are on-chain events. Redemption throughput under stress is therefore a public record rather than a claim. --- # Agent Instructions This documentation is published with GitBook. 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