Explanation of redemption functionality and process
Redemption orders are exclusively available to token holders, allowing them to convert their tokens into cash. This process enables investors to unlock the value of their investment and maximize the benefits of their digital asset holdings.
Investors who place a subscription order for a token receive minted tokens that serve as digital proof of their ownership in the investment. These tokens are digital assets representing ownership linked to the underlying investment contracts, enabling holders to reap the rewards of the investment's success.
How is a Redemption configured?
Redemption configuration defines when investors can request redemption orders. The Issuer, with the help of the customer agent, sets the following conditions:
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Start dateandend date→ Investors can only place orders during this period. Orders already created will remain active after theend date. -
Payment currency→ List of currencies defined by the issuer. The redeemed amount will be transferred to the investor in the currency selected by them, from the list defined previously. -
Autoburningfunction → If enabled, tokens will be automatically burned once payment is confirmed.
Open-ended Redemption Process: A Step-by-Step Guide
Step 1: The investor initiates a redemption
The investor initiates a redemption order by specifying the Tokens to redeem and selecting the preferred Payment currency.
Additionally, they provide the necessary details of the bank account where the issuer will deposit the Amount to pay.
As an open-ended redemption process, the Amount to pay is determined when the issuer sets the Net asset value (NAV).
During order creation, the investor receives an estimation based on the most recent NAV.
Tokens to redeem x estimated price per token = Estimated amount to pay
Initiated status, indicating that it has been submitted and awaits confirmation and processing by the issuer.
Step 2: Cancel or accept the order
Available actions:
Cancel → The issuer has the option to cancel the order, resulting in no redemption taking place.
The order could also be canceled by the investor, but only if the price has not yet been set.
Accept → By accepting the order, the issuer confirms their intention to proceed with the redemption.
This action blocks the tokens in the investor wallet, awaiting the transfer of the Amount to pay.
After approval, the order moves to Pending Payment status. Next, the issuer sets the Net Asset Value (NAV) for the token. If an order lacks a specified price, it uses this value to calculate the final Amount to Pay. During this stage, both the issuer and investor can cancel the order. If the investor initiates the cancellation, the status changes to Cancel Requested, needing final confirmation from the issuer to unblock the tokens in the investor's wallet.
After the price is set, the issuer transfers the agreed Amount to pay in the selected Payment currency to the investor's provided bank account. The issuer should trigger the Confirm payment from the redemption orders table once the payment has been sent, and the order remains in the Payment sent status.
Step 3: Burn and unblock tokens
In the last step, click the Burn button to release the blocked tokens in the investor's wallet, signaling the process's completion. The order status changes to Burned. By this point, the investor should have received the funds in their bank account, and with the tokens no longer accessible, the redemption process is successfully finalized.
Which payment methods are accepted?
Currently, when placing a redemption order, we accept payments in EUR, USD, GBP, and other currencies. If you need to use a specific FIAT currency that isn't listed, please reach out to us, and we'll do our best to accommodate your request.
How does the reconciliation work?
The reconciliation process for transfers is handled manually to ensure accuracy. As part of this process, the issuer is responsible for meticulously confirming that the precise amount is being transferred to the investor's designated bank account. This verification safeguards against any discrepancies and guarantees that the funds are accurately and securely delivered to the intended recipient.