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  1. RISK MANAGEMENT
  2. Advanced Peg Protection Mechanisms

Understanding the redemption mechanism

PreviousAdvanced Peg Protection MechanismsNextRisk parameters

Last updated 2 months ago

Redemptions act as a last resort protection of $fxUSD's peg. They should only happen if the other Advanced Peg Protection Mechanisms fail. 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.

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🚨Risk parameters