Redeem

You can redeem BitUSD for collateral at any time. 1 BitUSD will always be 1 USD worth of collateral. Redeeming incurs a redemption fee: ifor most collaterals it starts from 0,5 % and goes up all the way to 10 %. This fee decreases linearly with a 12-hour half-life. Different collaterals may have different fee amounts.

Redeeming is a core part of Bit Protocol, as it helps maintain BitUSD's peg to USD. It also offers arbitrage opportunities: Users can earn profit if BitUSD's value is below or above a certain threshold, as they are incentivized to mint more BitUSD or redeem it for 1 USD worth of collateral. You can see from the stats on the redeem page if earning via arbitrage is viable at the time.

If BitUSD < 1 USD, users are incentivized to redeem it for 1 USD worth of collateral. Redeeming decreases the total supply, and BitUSD's value increases closer to 1 USD.

If BitUSD > 1 USD, users are incentivized to mint more BitUSD, which decreases the value closer to 1 USD by increasing the total supply.

You can Redeem BitUSD for a collateral of your choice at any time by going to the "Redeem" section.

The only restrictions apply if Recovery Mode is active. If so, only actions that increase Protocol Total Collateral Ratio are permitted. This means redeeming might or might not be available.