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:
- 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.
What you'll want to know if you're building
- Token holders can redeem their tokens by calling
- A redemption rate can be specified in a funding cycle through the
- A ballot redemption rate can be specified in a funding cycle through the
JBController3_1.reconfigureFundingCyclesOf(...)transactions, which will override the standard redemption rate if there is currently a reconfiguration ballot active.