Redemption
redeem
Exchanging a stablecoin back to its underlying claim (USD, ETH collateral, USDC at a PSM).
For fiat-backed stables: primary-market redemption goes via the issuer (KYC'd, T+1-2). For CDP stables: close the vault by repaying debt, recover collateral. Redemption-window length and fees are top-line risk inputs — a long window means secondary-market depth carries the weight during stress.
Related terms
- MintIssuance of new stablecoin units against deposited reserves or collateral — the inverse of [[redemption]].
- Bank runCoordinated mass redemption that exhausts an issuer's liquid reserves before all holders can be paid.
- PSM (Peg Stability Module)A Maker module allowing 1:1 swaps between DAI and other stables (USDC, USDP, GUSD), keeping DAI tightly pegged.
- Liquidity riskThe risk you cannot exit a position at a fair price within a desired timeframe.