🆕 Mint vs. Burn vs. Transfer: A Treasury Rule for Exchange Operators

‍The clear playbook for minting, burning and treasury management for crypto platforms

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Short version: Only mint or burn when your platform’s net collateral changes. If funds move between wallets you already count, record a transfer. (View example of transfer on HollaEx white-label exchange docs)

Picture your counted wallets as being inside a fence. Wallets inside the fence back customer balances. Wallets outside do not. Crossing the fence changes supply. Moving inside the fence does not.

Term: external partner = any banking, payments, or liquidity partner you use for on‑ and off‑ramping.

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Step 1: Draw the fence

First, when it comes to crypto exchange treasury management it is important to decide which wallets are inside the fence:

• Client deposit and withdrawal wallets
• Omnibus / Treasury
• Hot, cold, and sweep wallets you include
• Trading or investment vaults that you choose to count

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Write the list. Share it. Keep one source of truth.

Most errors start with:

‍“WE tHoUgHt tHaT WaLLeT wAs iNsIdE...”

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There is no better example of the above than FTX -- If you know, you know.

If you are learning about this for the first time, we recommend reading about the basics here, otherwise read on for the full crypto tresurly playbook.

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Step 2: Apply the rule

• Mint when funds enter a wallet inside the fence.
• Burn when funds leave a wallet inside the fence and go outside.
• Transfer when funds move inside to inside.

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Examples:

• Mint: a customer deposit confirms into your Client or Omnibus wallet.
• Burn: a confirmed withdrawal leaves your Omnibus to a customer’s address.
• Transfer: a sweep from Client to Omnibus, or hot to cold.

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Common situations

Customer deposit → your wallet
Record: Mint when the deposit is final. Before that, show it as pending in the UI.

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‍Withdrawal → customer
Record: Burn when final. Many teams use first confirmation. The UI can show processing at broadcast.

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Treasury moves inside the fence
Client to Omnibus sweeps, hot to cold rebalancing, internal pre‑funds that you count.
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Record: Transfer.

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Earn or yield products

• Moving a user’s spot balance into Earn is on‑platform accounting. Transfer.
• If you deploy funds to an outside venue, Burn when the funds leave and Mint when they return (principal plus or minus yield).
• If the venue is inside, both legs are Transfers.
• If interest arrives from outside right before redemption, Mint that interest on arrival.

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User trading on your order book
Users swap balances that are already inside.
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Record: Transfers only.

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On and off‑ramp with an external partner

• External partner → you: Mint on confirmed receipt.
• You → external partner: Burn on confirmed outflow.

Fee note: Network fees are an expense. Do not treat them as a burn. Mint or burn the net amount that actually moved.

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Mint, Burn & Transfer Decision table

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Make these policy choices up front

• Which wallets are inside? Keep a single shared list and review it.
• What counts as “final” per chain? For example, 1 confirmation on BTC, 12 blocks on ETH.
• Which vaults or venues are inside vs outside?
• Do we always mint or burn the net amount after fees? Yes.
• What do customers see while things confirm? Use pending, processing, and confirmed states.

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Good defaults:

• Mint on confirmed deposits. Burn on first confirmation for withdrawals.
• Treat third‑party venues and bridges as outside unless you choose otherwise.
• Review the wallet list every 6 months or after major product changes.

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Pitfalls to avoid

• Two teams keeping different “inside wallet” lists.
• Minting interest before it arrives inside the fence.
• Burning the network fee instead of recording it as an expense.
• Rewriting history when policy changes. Log a one‑off adjustment instead.

Learn more about the basic of mint and burning here.

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Why this helps

• Cleaner, faster reconciliation between chain and ledger.
• Easier audits and clearer proof‑of‑reserves.
• Faster incident response because you can see which hop changed supply.

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Related playbooks

• Modular Crypto Exchanges: The New Blueprint for Building Customizable Trading Platforms — microservices, API-first crypto exchange platform design & composable modules.
  
• Hot, Cold, and Sweeps: Setting Treasury Thresholds — how much to keep hot, when to sweep, fee caps, and alerts.

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Streamline your exchange operations

Want a simpler way to automate all the sensitive minting, burning, and internal transfers? HollaEx® gives you a policy-driven treasury layer on top of the blockchain. Your team can move funds quickly and securely without second-guessing every step. Define your collateral perimeter once, automate the rest, and keep a clean audit trail.

You can learn more about how it works with our software on our open docs page:

• Handling Deposits and Minting
• Handling Withdrawals and Minting

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Looking for something more technical? Check out our APIs:

• Manual Mint Deposit
• Creating a manual Burn Withdrawal

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Need more answers? Speak with an expert at https://www.hollaex.com/start