# Redemption rate

#### What everyone needs to know​

• The redemption rate determines what proportion of treasury assets can be reclaimed by a token holder by redeeming their tokens.
• By default, all treasury assets that are considered overflow can be reclaimed by token holders. This can be modified using data source extensions.
• A project's redemption rate and extensions can be reconfigured each funding cycle.
• A redemption rate of 100% is linear, meaning a holder with 10% of the token supply can redeem all of their tokens for 10% of available treasury assets.
• A redemption rate of 0% will completely disable redemptions, meaning tokens cannot be redeemed.
• A redemption rate of `x`% where 0% < `x` < 100% will leave some assets in the treasury to share between those who wait longer to redeem. The smaller the `x`, the fewer assets can be reclaimed (see note below).
• A project can set a different redemption rate that takes effect only when the project's current funding cycle has an active ballot.
• Redemptions incur a JBX membership fee when the redemption rate (or ballot redemption rate) is less than 100%. This fee can be set anywhere between 0% and 5%.
Redemption when 0% < x < 100%

With a redemption rate of 50%, a holder with 10% of the token supply can redeem their tokens for slightly more than 5% of available treasury assets.

The other ~5% will remain in the treasury, thereby increasing the redemption value of everyone else's tokens by increasing the ratio of assets to tokens. This encourages holders to redeem later than others – the first holders to redeem will receive the fewest assets in return.

The reason that slightly more than 5% of assets would be returned: a redemption rate of 0% < `x`% < 100% allows for redemptions along a bonding curve. Specifically, the formula is:

Where:

• r is the redemption rate (from 0 to 1),
• o is the overflow, or the funds not being paid out from the treasury that funding cycle,
• s is the current token supply, and
• x is the amount of tokens being redeemed

Here is an example bonding curve with an overflow of 100 ETH, a total supply of 200 tokens, and a redemption rate of 71.7%. The X axis represents the number of tokens being redeemed, and the Y axis represents the ETH that would be returned. You can try editing the variables yourself.