Burn-and-mint loop

The burn-and-mint equilibrium (BME) is the only path by which OROG enters or leaves operator hands during normal network operation. It is pallet-enforced — there is no extrinsic on pallet-bme that bypasses the rule, and the foundation multisig cannot override the math (governance red line #16).

In this section

• Tokenomics overview — the four-way split.
• Emission rule — the mint headroom calculation.
• Slashing economics — how punishment feeds the burn side.
• RFC-0004 — batch settlement format.
• RFC-0008 — the oracle TWAP that prices the burn.

The loop, one inference at a time

+--------------+   USD or stablecoin    +--------------+
|  Customer    | ---------------------> |  Gateway     |
+--------------+                        +------+-------+
                                                |
                                                | (1) burn OROG at oracle TWAP
                                                v
                                        +--------------+
                                        |  pallet-bme  |
                                        +------+-------+
                                                |
                                                | (2) mint CUC (non-transferable)
                                                v
                                        +--------------+
                                        |  Customer    |
                                        |  CUC balance |
                                        +------+-------+
                                                |
                                                | (3) request inference
                                                v
                                        +--------------+
                                        |  Operator    |
                                        +------+-------+
                                                |
                                                | (4) receipt + settlement batch
                                                v
                                        +--------------+
                                        |  pallet-bme  |
                                        +------+-------+
                                                |
                                                | (5) consume CUC, mint OROG to operator
                                                v
                                        +--------------+
                                        |  Operator    |
                                        | OROG settle. |
                                        +--------------+

What the chain actually checks at settlement

A SettlementBatch extrinsic (see RFC-0004) is rejected if any of the following fails:

1. The gateway signature matches a registered gateway hotkey.
2. Per-operator aggregates are within the operator's on-chain stake-pool capacity.
3. The batch's aggregate mint is ≤ the epoch's remaining headroom from pallet-bme.
4. The batch's aggregate burn is ≥ aggregate mint at the oracle TWAP USD ratio (rejects under-burn, i.e. inflation attacks against the rule).

Asymmetric outcomes

• OROG appreciates between burn and mint. Fewer OROG are minted for the same USD-denominated payout than were burned at the customer side. Net effect: structural deflation on the supply curve.
• OROG depreciates between burn and mint. More OROG are minted, still capped by the rolling-180d burn-cap and the 5%/year supply ceiling. Operators receive the USD-equivalent target, the supply expands within the ceiling.

This is the asymmetry that makes the network's payouts USD-denominated to the operator without making OROG a stablecoin.

CUC properties

• Non-transferable. Soulbound to the account that burned the OROG.
• USD-pegged at mint by the oracle TWAP. 30-day expiry (forces fresh burn, keeps the customer side honest against speculative pre-buys).
• Spent on inference at gateway settlement; can also be refunded back to OROG before expiry via pallet-bme::refund at the live TWAP (so an operator outage does not strand customer funds).