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On this page
  • Prerequisites
  • Overview
  • Step 1: Access the Redemption Feature
  • Step 2: Review Redemption Information
  • Step 3: Enter Redemption Amount
  • Step 4: Review Transaction Details
  • Step 5: Confirm and Execute Redemption
  • Step 6: Verify Redemption
  • Understanding Redemption Mechanics
  • How Redemption Works
  • Redemption Fee
  • When to Redeem
  • Next Steps
  • Troubleshooting
  • Common Questions
  • Related Topics

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  1. USDFC Stablecoin
  2. Getting Started

Redeeming USDFC

Learn how to redeem your USDFC for FIL collateral under certain conditions

PreviousUsing the Stability PoolNextCore Mechanics

Last updated 16 days ago

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Prerequisites

  • USDFC tokens in your wallet

  • Access to the

  • Connected wallet with enough FIL for gas fees

  • Understanding of repayment with trove adjustments

  • Understanding of redemption mechanics and fees

Overview

Redemption is a process that allows you to exchange your USDFC for FIL collateral at face value (1 USDFC = $1 worth of FIL). This mechanism helps maintain the USDFC peg to the US dollar. This guide will walk you through the redemption process and help you understand when redemption is beneficial.

Repayment is adjusting your trove. However, the redemption is adjusting 3rd party's lowest collateral trove. To avoid getting redemption, please watch 'Debt in front' amount and increase the collateral ratio.

Step 1: Access the Redemption Feature

First, you need to navigate to the redemption section in the USDFC application.

  1. Navigate to the

  2. Connect your wallet if not already connected

  3. Locate the "Redemption" page in the "More" tab in the USDFC application

Step 2: Review Redemption Information

Before proceeding, review the current redemption information.

  1. Check the current redemption fee (variable based on the base rate)

  2. Understand which Troves will be affected by your redemption

  3. Review the current FIL price and calculate how much FIL you'll receive

Step 3: Enter Redemption Amount

Now you can specify how much USDFC you want to redeem.

  1. Enter the amount of USDFC you want to redeem

  2. The system will calculate the amount of FIL you will receive based on the current FIL price

  3. Review the redemption fee that will be applied

  4. Understand which Troves will be affected (redemptions start from the lowest collateral ratio Troves)

Step 4: Review Transaction Details

Before confirming, review all transaction details carefully.

  1. Check the USDFC amount you're redeeming

  2. Verify the FIL amount you'll receive

  3. Review the redemption fee

  4. Understand the gas costs for the transaction

Step 5: Confirm and Execute Redemption

Once you're satisfied with the details, you can proceed with the redemption.

  1. Click the "Confirm" button

  2. Confirm the transaction in your wallet

  3. Wait for the transaction to be processed on the blockchain

[Image: Screenshot of the confirmation screen with the "Redeem" button highlighted]

Step 6: Verify Redemption

After the transaction is confirmed, verify that your redemption was successful.

  1. Check that your USDFC balance has decreased by the redeemed amount

  2. Verify that the FIL has been added to your wallet balance

  3. Review the transaction details in your wallet history or on a blockchain explorer

Understanding Redemption Mechanics

How Redemption Works

  1. When you redeem USDFC, the system identifies Troves starting from the lowest collateral ratio

  2. Your USDFC is used to repay the debt of these Troves

  3. In return, you receive an equivalent value of FIL collateral (minus the redemption fee)

  4. This process continues until your redemption amount is fulfilled or no more Troves can be redeemed from

Redemption Fee

The redemption fee is variable and depends on the current base rate:

Redemption Fee=Base Rate+Redemption Fee Multiplier\text{Redemption Fee} = \text{Base Rate} + \text{Redemption Fee Multiplier}Redemption Fee=Base Rate+Redemption Fee Multiplier

The base rate increases with each redemption and decays over time, which helps prevent large-scale redemptions that could destabilize the system.

[Image: Graph showing how the base rate changes with redemptions]

When to Redeem

Redemption is most beneficial in the following scenarios:

  1. When USDFC is trading below its $1 peg (arbitrage opportunity)

  2. When you want to exit the USDFC system entirely

  3. When you believe FIL price will increase and want to acquire it at the current price

[Image: Decision flowchart for when to consider redemption]

Next Steps

  • Explore other ways to use your USDFC in the ecosystem

Troubleshooting

  • Transaction Failed: Ensure you have enough FIL for gas fees

  • Cannot Redeem: There may not be enough Troves available for redemption, or the system might be in Recovery Mode

  • High Redemption Fee: The base rate might be elevated due to recent redemptions; consider waiting for it to decay

Common Questions

Q: Can I redeem any amount of USDFC? A: Yes, but smaller amounts may not be cost-effective due to gas fees and the redemption fee.

Q: Which Troves are affected by my redemption? A: Redemptions start from the Troves with the lowest collateral ratios and move upward.

Q: Is there a waiting period for redemption? A: No, redemptions can be processed immediately, but the redemption fee increases with each redemption to prevent large-scale redemptions in a short period.

Q: Can redemptions be blocked? A: Yes, redemptions are disabled during Recovery Mode to protect the system's stability.

Related Topics

Consider as an alternative to redemption

Learn about if you have your own Trove

🧙
💸
USDFC application
USDFC application
depositing USDFC into the Stability Pool
managing collateral effectively
The Trove System
Redemption
Protocol Fees
Recovery Mode
The Redemption page location in the "More" tab
Screenshot of the redemption information page
The lowest Collateral Ratio Troves get redeemed
The Redemption section shows all relevant details
Screenshot showing updated wallet balances after redemption
Lowest Collateral Ratio Trove's FIL Collateral and USDFC Debt was reduced