Minting

Minting is the creation of new token units by a smart contract, expanding the token's total supply. In the context of index and vault tokens, minting issues new shares when a user deposits the required backing, so every new unit enters circulation fully collateralized. This is different from a fixed-supply token, where all units exist from launch, and from discretionary minting, where an admin can print new tokens at will.

For an in-kind index token, minting typically means depositing the basket's assets in proportion to their weights and receiving shares in return, though many platforms let you deposit a single asset and route swaps into the components behind the scenes. ERC-4626 vaults formalize this with standard deposit and mint functions that convert assets into shares at the vault's current exchange rate. Because supply expands with deposits and contracts with redemptions, the share price tracks the value of the backing rather than the scarcity of the token itself.

Minting rules are a core security question. If a contract lets a privileged address mint without depositing backing, holders can be diluted toward zero, which is a classic rug-pull mechanic. Prefer designs where minting is permissionless but strictly collateralized, ideally in an immutable contract. On Tessera, for example, new index shares are only minted against in-kind deposits held in the vault, so supply and backing move together. Always verify mint permissions onchain before trusting a token.