How It Works

# OTC Issuance and Redemption

OTC is how S&F creates or destroys synthetic exposure through protocol settlement.

It is not an instant swap. It is a two-step process that settles at the next oracle round.

# Flow

OTC changes protocol supply. That is why it waits for oracle settlement.

# Issuance

Alice wants to mint S-BTC.

1. Alice enters an OTC trade and locks ETC.
2. The protocol records the request for the current oracle round.
3. A new oracle price is submitted.
4. Alice or an approved claimer settles the trade.
5. The protocol mints internal shares and Alice receives the S-BTC balance represented by those shares.

The settlement price comes from the oracle round, not from an AMM curve.

# Redemption

Alice wants to exit back to ETC.

1. Alice starts an OTC exit.
2. The protocol converts the requested token amount into internal shares and locks those shares.
3. A new oracle price is submitted.
4. Alice or an approved claimer settles the exit.
5. The protocol burns the settled shares and sends ETC back according to the position value.

# Why settlement is delayed

The delay protects the protocol from stale-oracle settlement.

Without a delay, a trader could try to mint or redeem against an old price while knowing that the next oracle price is different.

By settling at the next oracle round, S&F makes issuance and redemption use the correct settlement price.

# What OTC is for

OTC is for protocol issuance and redemption.

It is the path that changes synthetic supply and pool exposure. If a user wants immediate execution, they use Market trading instead.