Redemption is the process where the minter closes the mint position by returning the minted dAssets. The returned dAssets will be burned from the market. The minter then receives the collateral used for minting.
Please make sure that you have enough dAssets to fully redeem and close the mint position. If you have sold your minted dAssets, you have to find a way to retrieve those dAssets from the market to close the position. i.e. Buying from the market OR open another minting position.
- Alice opened a mint position of 1 dXXX (Oracle price of $100) with $150 worth of DOLLY(This example excludes minting fee to make it easier to understand)
- Seeing that the Twindex price of dXXX is now at 105 DOLLY, Alice immediately sold her minted dAssets for 105 DOLLY
- After a while, the Twindex price of dXXX is now at 100 DOLLY, Alice bought 1 dXXX with 100 DOLLY
- Alice can now redeem her collateral back by using her 1 dXXX to redeem back her collateral of $150 worth of DOLLY, meaning she made a profit of $5 this way (excluding the mint fees)