aUSD Redemption

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

When aUSD is redeemed for collateral, the system cancels the aUSD 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 (≠ aAssets) are used for redemption.

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

Redemptions create a price floor

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

Redemptions are blocked when TCR < 110% (there is no need to restrict ICR < TCR). At that TCR redemptions would likely be unprofitable, as aUSD is probably trading above $1 if the system has crashed that badly, but it could be a way for an attacker with a lot of aUSD to lower the TCR even further.

Expected User Behaviors

Generally, borrowers call functions that trigger Vault operations on their own Vault.

Anyone may call the public liquidation functions and attempt to liquidate one or several Vaults.

aUSD token holders may also redeem their tokens and swap an amount of tokens 1-for-1 in value (minus fees) with Collateral.

Swap Pool Liquidity providers either mint new Apollon out of their Vault or deposit them directly from their balance.