AZNS Stablecoin — Reserve & Redemption Policy

What AZNS is

AZNS is a manat-pegged stablecoin issued by Baysart MMC (the "provider"). At all times one AZNS is treated as equal to one Azerbaijani manat (1 AZNS = 1 AZN).

AZNS exists on two blockchains: as an ERC-20 token on the Polygon network and as an SPL token on the Solana network. AZNS on either network represents the same liability and is backed by a single reserve ledger.

AZNS is issued and redeemed only by the provider: when cash is paid in, new AZNS is created (minted) using the provider's issuer key; on cash-out or redemption, AZNS is destroyed (burned).

AZNS is a liability of the provider to you — it represents your right to redeem it for manat at any time. AZNS is not a bank deposit and is not the liability of any bank.

Redemption right

As an AZNS holder you have a direct right to redeem your AZNS for manat at par — that is, 1 AZN for each 1 AZNS — at any time. This right is enforceable against the provider.

Redemption is carried out through the cash-out flow in the app: the AZNS being redeemed is debited from your balance and burned, and the corresponding manat amount is paid out to a verified channel you designate.

The target processing timeline is typically 1–2 business days. Redemption requests are processed subject to lawful identity verification (KYC/AML) and the availability of payout channels; daily or per-transaction redemption caps may apply and will be disclosed to you at the time of execution.

The provider charges no redemption fee for redeeming at par (zero fee). Any third-party bank transfer costs or network (gas) fees, where applicable, are shown separately from the redemption itself.

Temporary suspension of redemption

Redemption may be suspended only in narrow, pre-disclosed circumstances and only temporarily. Any such suspension applies equally (equitably) to all holders and is limited principally to the following:

A suspension is not a permanent termination. Redemption resumes as soon as the cause of suspension is removed, and requests received during the suspension are processed on an equitable basis.

• Force majeure events (circumstances beyond the provider's control that prevent payment or blockchain infrastructure from operating)
• A lawful instruction, order or requirement of a competent authority, court or regulator
• The need to complete sanctions screening or lawful anti-money-laundering checks

Reserve composition

Every AZNS in circulation is backed 1:1 by reserves. The reserve consists of three components: manat bank deposits, on-chain USD stablecoins, and funds held in custody at the Settlement/Liquidity Partner.

The manat liability is primarily backed in manat: the core portion of the reserve is held as manat bank deposits so that the peg rests on a manat base.

The USD-stablecoin component serves as a liquidity and settlement layer — providing fast cross-chain settlement and liquidity. This component is subject to a disclosed cap and buffer so that the core of the manat liability remains in manat.

The USD-stablecoin component introduces foreign-exchange (FX) risk against the manat peg, because it is denominated in US dollars. This risk is disclosed separately in the "Risks" section.

Reserve segregation

The reserve is held segregated from the provider's own assets and is not commingled with the provider's operating funds.

The reserve is intended to be held in trust and/or within a bankruptcy-remote structure for the benefit of AZNS holders, so that on the provider's insolvency the reserve is not available to its general creditors and serves first the redemption claims of AZNS holders.

The exact legal form of this structure and its enforcement mechanism are being finalised subject to legal advice.

Solvency controls

The provider operates a fail-closed solvency gate: the AZNS supply in circulation can never exceed the reserve (supply ≤ reserve). This condition is checked before any new AZNS is issued.

Circulation across both networks — Polygon and Solana — is tracked through a single, cross-chain reserve ledger. The combined supply on both chains is reconciled continuously against one reserve base.

If a mismatch between supply and reserve is detected, or if the current state of the reserve cannot be read reliably, minting halts immediately. The gate closes on doubt — it does not remain open.

These controls are designed to ensure AZNS remains fully backed at all times and that under-collateralised issuance is blocked at the structural level.

Independent attestation and audit

The provider is committed to independent attestation of reserves and to audit, so that the full backing of AZNS in circulation can be independently verified.

The cadence, scope and the independent attestor/auditor for these reviews are as follows.

The on-chain reserve addresses holding the USD-stablecoin component may be published for public verification, so that the balance of this component can be confirmed directly on the blockchain.

No interest or yield

AZNS pays holders no interest, yield, reward or other distribution. Holding AZNS does not promise you any investment return.

Income earned on the reserve (for example, bank-deposit interest) accrues to the provider. This reflects that AZNS is intended as a non-interest-bearing means of payment and settlement.

Risks

Holding and using AZNS carries the following risks. Do not use AZNS without understanding them.

• Peg/de-peg risk: although the provider honours redemption at par, AZNS may be bought or sold below 1 AZN on secondary markets or exchanges; the market price is not guaranteed.
• Foreign-exchange (FX) risk: the USD-stablecoin component of the reserve is denominated in US dollars, so movements in the USD/AZN rate can affect the manat value of the reserve.
• Third-party issuer risk: the USD stablecoins are issued by third-party stablecoin issuers; problems with their solvency, reserves or governance can affect the AZNS reserve.
• Smart-contract risk: a software defect, exploit or chain-level event may occur in the AZNS smart contracts and in the stablecoins held.
• Not a deposit: AZNS is not a bank deposit, is not covered by any deposit-guarantee scheme, and is not protected by any investor-compensation scheme. In the event of the provider's insolvency, the return of all funds is not guaranteed.

Orderly wind-down and issuer-failure plan

If the provider must wind AZNS down in an orderly manner, or is unable to meet its obligations, an equitable and pro-rata redemption to AZNS holders out of the segregated reserve is contemplated.

In such a situation the redemption process — the channel for accepting claims, the timelines and the pro-rata allocation method — will be conducted through a pre-announced, named process.

Crypto-assets you hold under your own keys (self-custody) are unaffected by this plan: a failure of the provider does not change your control over assets you manage with your own keys. The wind-down concerns only the redemption of AZNS, which is the provider's liability.

Not legal tender

AZNS and other crypto-assets are not legal tender in the Republic of Azerbaijan. The only legal tender in Azerbaijan is the Azerbaijani manat.

No one is required by law to accept AZNS as payment. Acceptance of AZNS for payment or settlement depends entirely on the agreement of the parties.