Redemptions
Redeem ALUD for collateral at face value.
Source: client/src/pages/redemptions.tsx
Overview
Any ALUD holder can redeem their tokens for $1 worth of collateral at any time. This mechanism helps maintain the ALUD peg — if ALUD drops below $1, arbitrageurs can buy it cheap and redeem for $1 of collateral.
How It Works
Select which collateral to receive (WBTC, WETH, or LINK)
Enter ALUD amount to redeem
Preview the collateral amount you'll receive (minus 0.5% fee)
Confirm transaction
Fee
Redemption fee
0.5%
The fee is deducted from the collateral received. For example, redeeming 100 ALUD for WETH:
$100 worth of WETH at market price
Minus 0.5% fee = $99.50 worth of WETH received
Redemption Target
Redemptions pull collateral from the trove with the lowest collateral ratio first, incentivizing all borrowers to maintain healthy ratios.
Peg Mechanism: Redemptions are the primary mechanism keeping ALUD pegged to $1. If ALUD trades below $1, redemption becomes profitable, creating buy pressure until the peg is restored.
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