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: in case of ROSE 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 a certain threshold, as users are incentivized to mint more BitUSD and 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, users are incentivized to mint more BitUSD, which decreases the value closer to 1.

You can Redeem BitUSD at any time by going to the "Redeem" section.