diff --git a/.github/workflows/backend-ci.yml b/.github/workflows/backend-ci.yml
index fca0f0d8..208b6ee3 100644
--- a/.github/workflows/backend-ci.yml
+++ b/.github/workflows/backend-ci.yml
@@ -13,6 +13,29 @@ on:
 jobs:
   build-and-test:
     runs-on: ubuntu-latest
+    services:
+      postgres:
+        image: postgres:16-alpine
+        env:
+          POSTGRES_DB: chainforge_test
+          POSTGRES_PASSWORD: postgres
+          POSTGRES_USER: postgres
+        ports:
+          - 5432:5432
+        options: >-
+          --health-cmd "pg_isready -U postgres -d chainforge_test"
+          --health-interval 10s
+          --health-timeout 5s
+          --health-retries 5
+      redis:
+        image: redis:7-alpine
+        ports:
+          - 6379:6379
+        options: >-
+          --health-cmd "redis-cli ping"
+          --health-interval 10s
+          --health-timeout 5s
+          --health-retries 5
 
     steps:
       - uses: actions/checkout@v4
@@ -34,8 +57,20 @@ jobs:
       - name: Lint
         run: pnpm --filter backend run lint
 
-      - name: Test
-        run: pnpm --filter backend run test
+      - name: Prepare coverage database
+        working-directory: app/backend
+        env:
+          DATABASE_URL: postgresql://postgres:postgres@localhost:5432/chainforge_test?schema=public
+        run: pnpm exec prisma db push --skip-generate
+
+      - name: Test with coverage
+        env:
+          API_KEY: test-api-key-123
+          DATABASE_URL: postgresql://postgres:postgres@localhost:5432/chainforge_test?schema=public
+          NODE_ENV: test
+          REDIS_HOST: 127.0.0.1
+          REDIS_PORT: '6379'
+        run: pnpm --filter backend run test:cov
 
       - name: Build
         run: pnpm --filter backend run build
@@ -43,7 +78,7 @@ jobs:
       - name: Export OpenAPI spec
         working-directory: app/backend
         env:
-          DATABASE_URL: file:./prisma/dev.db
+          DATABASE_URL: postgresql://postgres:postgres@localhost:5432/chainforge_test?schema=public
           NODE_ENV: development
         run: npm run spec:export
 
diff --git a/.github/workflows/testnet-smoke.yml b/.github/workflows/testnet-smoke.yml
index d024f672..b1cdd6b2 100644
--- a/.github/workflows/testnet-smoke.yml
+++ b/.github/workflows/testnet-smoke.yml
@@ -13,11 +13,29 @@ on:
       - 'release/**'
 
 jobs:
+  check-configuration:
+    runs-on: ubuntu-latest
+    outputs:
+      configured: ${{ steps.check.outputs.configured }}
+    steps:
+      - name: Check testnet configuration
+        id: check
+        env:
+          SOROBAN_CONTRACT_ID: ${{ secrets.SOROBAN_CONTRACT_ID }}
+          SOROBAN_RPC_URL: ${{ secrets.SOROBAN_RPC_URL }}
+        run: |
+          if [[ -n "$SOROBAN_CONTRACT_ID" && -n "$SOROBAN_RPC_URL" ]]; then
+            echo "configured=true" >> "$GITHUB_OUTPUT"
+          else
+            echo "configured=false" >> "$GITHUB_OUTPUT"
+          fi
+
   integration-harness:
     name: Testnet Integration Harness
     runs-on: ubuntu-latest
+    needs: check-configuration
     if: >
-      github.event_name == 'workflow_dispatch' || (secrets.SOROBAN_CONTRACT_ID != '' && secrets.SOROBAN_RPC_URL != '')
+      github.event_name == 'workflow_dispatch' || needs.check-configuration.outputs.configured == 'true'
     steps:
       - name: Checkout
         uses: actions/checkout@v4
diff --git a/app/backend/package.json b/app/backend/package.json
index f09a435a..d3e66fdc 100644
--- a/app/backend/package.json
+++ b/app/backend/package.json
@@ -23,7 +23,8 @@
     "format:check": "prettier --check \"src/**/*.ts\" \"test/**/*.ts\"",
     "test": "jest",
     "test:watch": "jest --watch",
-    "test:cov": "jest --coverage",
+    "test:cov": "jest --config ./test/jest-coverage.js --coverage",
+    "coverage:baseline": "node ./test/generate-coverage-baseline.js",
     "test:debug": "node --inspect-brk -r tsconfig-paths/register -r ts-node/register node_modules/.bin/jest --runInBand",
     "test:e2e": "jest --config ./test/jest-e2e.json",
     "test:e2e:ci": "prisma migrate deploy && jest --config ./test/jest-e2e.json --runInBand",
@@ -109,9 +110,27 @@
       "^.+\\.(t|j)s$": "ts-jest"
     },
     "collectCoverageFrom": [
-      "**/*.(t|j)s"
+      "src/**/*.(t|j)s",
+      "cache/**/*.(t|j)s",
+      "!src/**/*.spec.ts",
+      "!src/**/examples/**",
+      "!src/main.ts",
+      "!src/**/*.module.ts",
+      "!src/**/*.dto.ts",
+      "!src/**/dto/**",
+      "!src/**/types/**",
+      "!src/**/*.d.ts",
+      "!src/**/index.ts"
     ],
     "coverageDirectory": "../coverage",
+    "coverageThreshold": {
+      "global": {
+        "lines": 80,
+        "branches": 70,
+        "functions": 80,
+        "statements": 80
+      }
+    },
     "testEnvironment": "node",
     "moduleNameMapper": {
       "^src/(.*)$": "<rootDir>/src/$1"
diff --git a/app/backend/test/coverage-baseline.json b/app/backend/test/coverage-baseline.json
new file mode 100644
index 00000000..9109d1cf
--- /dev/null
+++ b/app/backend/test/coverage-baseline.json
@@ -0,0 +1,131 @@
+[
+  ["cache/redis.service.ts",-24,-8,-6,-25],
+  ["src/aid/aid.controller.ts",-5,-6,-5,-5],
+  ["src/aid/aid.service.ts",-12,-6,-4,-12],
+  ["src/analytics/analytics.controller.ts",-9,-4,-3,-9],
+  ["src/analytics/analytics.service.ts",-42,-46,-13,-42],
+  ["src/analytics/privacy.service.ts",-17,-12,-1,-18],
+  ["src/api-keys/api-keys.controller.ts",-8,-9,-4,-8],
+  ["src/api-keys/api-keys.service.ts",-3,-7,100,-4],
+  ["src/app.controller.ts",-1,-1,-1,-1],
+  ["src/app.service.ts",100,100,100,100],
+  ["src/audit/audit.controller.ts",100,-7,100,100],
+  ["src/audit/audit.service.ts",-5,-17,-2,-13],
+  ["src/auth/roles.decorator.ts",100,100,100,100],
+  ["src/auth/roles.guard.ts",100,-1,100,100],
+  ["src/campaigns/campaigns.controller.ts",-29,-16,-8,-29],
+  ["src/campaigns/campaigns.service.ts",-30,-41,-6,-36],
+  ["src/claims/cancel-and-reissue.service.ts",-76,-51,-10,-78],
+  ["src/claims/claim-export.controller.ts",-8,-2,-1,-8],
+  ["src/claims/claim-lifecycle.controller.ts",-10,-12,-9,-10],
+  ["src/claims/claim-receipt.controller.ts",-2,-4,-2,-2],
+  ["src/claims/claim.events.ts",100,100,100,100],
+  ["src/claims/claims.service.ts",-64,-88,-11,-68],
+  ["src/common/budget/budget.service.ts",100,-1,100,100],
+  ["src/common/constants/api-version.constants.ts",-8,-2,-3,-8],
+  ["src/common/decorators/deprecated.decorator.ts",-2,-6,100,-2],
+  ["src/common/decorators/http-cache.decorator.ts",-3,100,-3,-3],
+  ["src/common/decorators/public.decorator.ts",100,100,100,100],
+  ["src/common/encryption/encryption.service.ts",-11,-1,-2,-11],
+  ["src/common/filters/http-exception.filter.ts",-5,-12,-5,-7],
+  ["src/common/guards/adaptive-rate-limit.guard.ts",-6,-14,100,-10],
+  ["src/common/guards/api-key.guard.ts",100,-4,100,100],
+  ["src/common/guards/org-ownership.guard.ts",100,100,100,100],
+  ["src/common/guards/webhook-hmac.guard.ts",-20,-20,-1,-20],
+  ["src/common/hmac/hmac.service.ts",-8,-3,-3,-8],
+  ["src/common/interceptors/deprecation.interceptor.ts",-12,-12,100,-12],
+  ["src/common/interceptors/http-cache.interceptor.ts",-6,-23,100,-7],
+  ["src/common/interceptors/logging.interceptor.ts",-16,-8,-4,-18],
+  ["src/common/interceptors/request-id.interceptor.ts",-11,-2,-2,-13],
+  ["src/common/security/csp-report.controller.ts",-2,-1,-1,-2],
+  ["src/common/services/internal-notes.service.ts",-5,-2,-2,-5],
+  ["src/common/utils/correlation-id.util.ts",-3,-4,-2,-3],
+  ["src/common/utils/env-loader.ts",100,-2,100,100],
+  ["src/common/utils/json-canonicalize.util.ts",-1,-3,100,-1],
+  ["src/controllers/api_keys_controller.js",-14,100,-4,-14],
+  ["src/deployment-metadata/deployment-metadata.controller.ts",-25,-16,-7,-25],
+  ["src/deployment-metadata/deployment-metadata.service.ts",100,-7,100,100],
+  ["src/entity-linking/entity-linking.controller.ts",-9,-7,-7,-9],
+  ["src/entity-linking/entity-linking.service.ts",-46,-57,-1,-46],
+  ["src/evidence/evidence.controller.ts",-18,-29,-5,-18],
+  ["src/evidence/evidence.service.ts",-50,-23,-6,-54],
+  ["src/evidence/file-validation.ts",-1,-5,100,-2],
+  ["src/evidence/fingerprint.service.ts",-38,-21,-9,-44],
+  ["src/evidence/upload-session.controller.ts",-14,-31,-4,-14],
+  ["src/evidence/upload-session.service.ts",-1,-7,100,-2],
+  ["src/handlers/transaction.ts",-10,-2,-2,-12],
+  ["src/health/health.controller.ts",-14,-21,-4,-14],
+  ["src/health/health.service.ts",-34,-28,-5,-34],
+  ["src/idempotency/error.ts",-12,100,-5,-12],
+  ["src/idempotency/fingerprint.ts",-16,-6,-6,-17],
+  ["src/idempotency/key.ts",-17,-8,-3,-17],
+  ["src/idempotency/middleware.ts",-32,-18,-4,-32],
+  ["src/idempotency/store.ts",-11,-4,-4,-11],
+  ["src/interceptors/idempotency.interceptor.ts",-19,-8,-4,-21],
+  ["src/interceptors/logging.interceptor.ts",100,-1,100,100],
+  ["src/jobs/dlq.service.ts",-6,-7,-1,-6],
+  ["src/jobs/jobs.controller.ts",-10,-11,-5,-11],
+  ["src/logger/log-redaction.util.ts",-11,-7,-2,-11],
+  ["src/logger/logger.service.ts",-13,-34,-2,-13],
+  ["src/middleware/correlation-propagation.util.ts",-5,-1,-2,-5],
+  ["src/middleware/idempotency.ts",-28,-9,-4,-28],
+  ["src/middleware/request-correlation.middleware.ts",100,-1,100,100],
+  ["src/notifications/email/email.service.ts",100,-3,100,100],
+  ["src/notifications/interfaces/notification-job.interface.ts",100,100,100,100],
+  ["src/notifications/notifications.processor.ts",-2,-15,100,-2],
+  ["src/notifications/notifications.service.ts",100,-3,100,100],
+  ["src/notifications/outbox.controller.ts",100,-1,100,100],
+  ["src/notifications/providers/mock-sms.provider.ts",100,100,100,100],
+  ["src/notifications/providers/sms-provider.interface.ts",100,100,100,100],
+  ["src/notifications/providers/twilio-sms.provider.ts",100,100,100,100],
+  ["src/observability/entities/observability.entity.ts",-1,100,100,-1],
+  ["src/observability/health/health.controller.ts",-37,-26,-12,-42],
+  ["src/observability/health/health.service.ts",-40,-16,-4,-42],
+  ["src/observability/metrics/metrics.controller.ts",100,100,100,100],
+  ["src/observability/metrics/metrics.middleware.ts",100,-2,100,100],
+  ["src/observability/metrics/metrics.providers.ts",100,100,100,100],
+  ["src/observability/metrics/metrics.service.ts",-24,-29,-14,-24],
+  ["src/observability/observability.controller.ts",-5,-3,-5,-5],
+  ["src/observability/observability.service.ts",-5,100,-5,-5],
+  ["src/observability/tracing/tracing.service.ts",-18,-13,-1,-18],
+  ["src/onchain/aid-escrow.controller.ts",-17,-14,-1,-17],
+  ["src/onchain/aid-escrow.service.ts",-10,-8,-1,-10],
+  ["src/onchain/interfaces/onchain-job.interface.ts",100,100,100,100],
+  ["src/onchain/ledger-admin.controller.ts",-16,-12,-4,-16],
+  ["src/onchain/ledger-backfill.service.ts",-49,-27,-7,-51],
+  ["src/onchain/ledger-reconciliation.service.ts",-46,-41,-8,-48],
+  ["src/onchain/onchain.adapter.mock.ts",-11,100,-5,-11],
+  ["src/onchain/onchain.adapter.ts",100,100,100,100],
+  ["src/onchain/onchain.processor.ts",-33,-37,-3,-33],
+  ["src/onchain/onchain.service.ts",-12,-8,-4,-12],
+  ["src/onchain/soroban-onchain.adapter.ts",-84,-42,-20,-87],
+  ["src/onchain/soroban.adapter.ts",-197,-100,-44,-201],
+  ["src/onchain/utils/contract-value.ts",-14,-18,-2,-14],
+  ["src/onchain/utils/retry-with-timeout.ts",-14,-7,-4,-16],
+  ["src/onchain/utils/soroban-error.mapper.ts",-30,-36,-1,-30],
+  ["src/orgs/invites.controller.ts",-5,-9,-4,-5],
+  ["src/orgs/invites.processor.ts",-4,-3,-1,-4],
+  ["src/orgs/invites.service.ts",-27,-14,-4,-29],
+  ["src/prisma/prisma.service.ts",-3,-2,100,-3],
+  ["src/retention-policy/retention-policy.controller.ts",-11,-3,-9,-11],
+  ["src/retention-policy/retention-policy.service.ts",-25,-20,100,-25],
+  ["src/retention-policy/retention-purge.processor.ts",-7,-1,-2,-8],
+  ["src/sandbox/demo-seeds.constants.ts",100,100,100,100],
+  ["src/sandbox/sandbox.controller.ts",-7,-1,-5,-7],
+  ["src/sandbox/sandbox.guard.ts",-3,-2,-1,-3],
+  ["src/sandbox/seed.service.ts",-50,-13,-7,-52],
+  ["src/search/admin-search.controller.ts",-2,-3,-1,-2],
+  ["src/search/admin-search.service.ts",-19,-17,-5,-19],
+  ["src/services/api_keys_service.js",-12,100,-6,-13],
+  ["src/session/session.controller.ts",100,-8,100,100],
+  ["src/session/session.service.ts",-25,-34,-3,-26],
+  ["src/swagger.config.ts",-3,100,-1,-3],
+  ["src/test-error/test-error.controller.ts",-11,-1,-9,-11],
+  ["src/verification/enhanced-verification-flow.service.ts",-60,-36,-16,-65],
+  ["src/verification/verification-flow.service.ts",-1,-6,100,-1],
+  ["src/verification/verification-inbox.controller.ts",-15,-29,-8,-15],
+  ["src/verification/verification-inbox.service.ts",-21,-12,-4,-21],
+  ["src/verification/verification.controller.ts",-14,-15,-12,-14],
+  ["src/verification/verification.processor.ts",100,-8,100,100],
+  ["src/verification/verification.service.ts",-69,-51,-15,-69]
+]
diff --git a/app/backend/test/generate-coverage-baseline.js b/app/backend/test/generate-coverage-baseline.js
new file mode 100644
index 00000000..1ad09195
--- /dev/null
+++ b/app/backend/test/generate-coverage-baseline.js
@@ -0,0 +1,35 @@
+const fs = require('node:fs');
+const path = require('node:path');
+
+const backendRoot = path.resolve(__dirname, '..');
+const summaryPath = path.resolve(backendRoot, '../coverage/coverage-summary.json');
+const outputPath = path.resolve(__dirname, 'coverage-baseline.json');
+const summary = JSON.parse(fs.readFileSync(summaryPath, 'utf8'));
+const metrics = ['lines', 'branches', 'functions', 'statements'];
+const globalSentinel = 'src/auth/app-role.enum.ts';
+const uncoveredTolerance = {
+  'src/health/health.service.ts': { branches: 1 },
+};
+
+const entries = Object.entries(summary)
+  .filter(([file]) => file !== 'total')
+  .map(([file, coverage]) => [path.relative(backendRoot, file), coverage])
+  .filter(([file]) => file.startsWith('src/') || file.startsWith('cache/'))
+  .filter(([file]) => file !== globalSentinel)
+  .sort(([left], [right]) => left.localeCompare(right));
+
+const baseline = entries.map(([file, coverage]) => [
+  file,
+  ...metrics.map(metric => {
+    const uncovered = coverage[metric].total - coverage[metric].covered;
+    const tolerance = uncoveredTolerance[file]?.[metric] ?? 0;
+    return uncovered === 0 && tolerance === 0 ? 100 : -(uncovered + tolerance);
+  }),
+]);
+
+const output = `[\n${baseline
+  .map(entry => `  ${JSON.stringify(entry)}`)
+  .join(',\n')}\n]\n`;
+
+fs.writeFileSync(outputPath, output);
+console.log(`Wrote a baseline for ${baseline.length} coverage files.`);
diff --git a/app/backend/test/jest-coverage.js b/app/backend/test/jest-coverage.js
new file mode 100644
index 00000000..2a4d995a
--- /dev/null
+++ b/app/backend/test/jest-coverage.js
@@ -0,0 +1,33 @@
+const { jest: baseConfig } = require('../package.json');
+const coverageBaseline = require('./coverage-baseline.json');
+
+const baselineThresholds = Object.fromEntries(
+  coverageBaseline.map(
+    ([file, lines, branches, functions, statements]) => [
+      file,
+      { lines, branches, functions, statements },
+    ],
+  ),
+);
+
+module.exports = {
+  ...baseConfig,
+  rootDir: '..',
+  testRegex: [
+    '.*\\.spec\\.ts$',
+    '.*verification-lifecycle\\.e2e-spec\\.ts$',
+  ],
+  testPathIgnorePatterns: ['/test/idempotency\\.spec\\.ts$'],
+  moduleNameMapper: {
+    ...baseConfig.moduleNameMapper,
+    '^cache/(.*)$': '<rootDir>/cache/$1',
+    '^@stellar/stellar-sdk$': '<rootDir>/test/mocks/stellar-sdk.mock.ts',
+    '^openai$': '<rootDir>/test/mocks/openai.mock.ts',
+  },
+  coverageReporters: ['text', 'json-summary'],
+  coverageThreshold: {
+    global: baseConfig.coverageThreshold.global,
+    ...baselineThresholds,
+  },
+  forceExit: true,
+};