Understanding the redemption mechanism

Redemptions act as a last resort protection of $fxUSD's peg. They should only happen if the other Advanced Peg Protection Mechanisms fail. For that reason, the redemption feature is only possible when fxUSD is deppeged according to the Risk parameters. The redemption mechanism ensures that fxUSD can always be redeemed for $1 worth of fxUSD's collateral. The redeemed collateral is taken by reducing the debt xPOSITIONS, starting with the most leveraged one and not exceeding a certain proportion of each position before moving to the next leverage level. It gives an incentive to buy discounted fxUSD and redeem it for its collateral for a profit while restoring fxUSD's peg. The redemption can be triggered using the following contract. Please note that a redemption fee is applied. Redemption fees and the maximum proportion of an xPOSITION to be redeemed can be found here.

🚨Risk parameters