# 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](/fx-docs/risk-management/advanced-peg-protection-mechanisms.md) fail. For that reason, the redemption feature is only possible when fxUSD is deppeged according to the [Risk parameters](/fx-docs/risk-management/risk-parameters.md).\
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The redemption mechanism ensures that fxUSD can be redeemed for $1 worth of fxUSD's collateral.\
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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.\
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It gives an incentive to buy discounted fxUSD and redeem it for its collateral for a profit while restoring fxUSD's peg.\
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The redemption can be triggered using the following [contract](https://etherscan.io/address/0x250893CA4Ba5d05626C785e8da758026928FCD24#writeProxyContract). Please note that a redemption fee is applied.\
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Redemption fees and the maximum proportion of an xPOSITION to be redeemed can be found here.<br>

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[Risk parameters](/fx-docs/risk-management/risk-parameters.md)
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