jUSD Redemption

Any jUSD holder (whether or not they have an active Vault) may redeem their jUSD directly with the system. Their jUSD is exchanged for collateral at face value: redeeming x jUSD tokens returns $x worth of collateral tokens (minus a redemption fee). Redemptions are only enabled for jUSD Token, no other jAsset.

When jUSD is redeemed for collateral, the system cancels the jUSD with debt from Vaults, and the collateral is drawn from their Vaults.

If the Vault uses different collateral tokens, they will be used equally based on their current $ valuation. This means that the ratio between them does not change. Only collateral tokens that aren’t minted by the protocol (≠ jAssets) are used for redemption.

In order to fulfill the redemption request, Vaults are redeemed from in ascending order of their last active collateralization ratio (LACR). The LACR is the Vault's ICR at the time of the last operation by the Vault owner.

Redemptions create a price floor

Economically, the redemption mechanism creates a hard price floor for jUSD, ensuring that the market price stays at or near $1 USD.

Redemptions are blocked when TCR < 110%. At that TCR, redemptions would likely be unprofitable, as jUSD is probably trading above $1 if the system has crashed that badly. However, it could be a way for an attacker with a lot of jUSD to lower the TCR even further.