Upon launch, the redemption feature of Real USD (USDR) within the RWAX Protocol will allow users to convert their tokens back into the underlying assets or to engage with the secondary market for liquidity. Here’s an in-depth look at the redemption process:

​
Withdrawal of Underlying Assets

The most direct method to redeem USDR will be by withdrawing the Real World Assets (RWAs) that back the token.

1

Initiate Redemption

Users access the RWAX platform through their connected digital wallet. They specify the amount of USDR they wish to redeem, and the protocol confirms the availability of the corresponding RWAs.

2

Execute Transaction

Upon confirmation, the protocol executes the transaction, burning the USDR tokens and transferring the ownership or control of the underlying RWAs back to the user’s wallet or designated financial instrument.

3

Asset Management

The withdrawal of RWAs gives users the option to either hold these assets or use them for other financial activities outside the protocol. This feature is particularly beneficial for those who prefer to deal in tangible assets or require the liquidity of these assets for other purposes.

​
Secondary Market Transactions

Direct Trading

USDR holders can sell their tokens directly to other users or through decentralized exchanges (DEXs) that list USDR. This market-driven approach allows for trading USDR against other digital currencies like USDC, USDT, or other cryptocurrencies.

Market Dynamics

The secondary market plays a critical role in maintaining the peg of USDR to the USD. Traders can take advantage of any discrepancies between the USDR price and its peg through arbitrage, buying USDR when it’s undervalued or selling when overvalued, which naturally enforces the peg.

Peg Maintenance

The expectation is that the market will support the peg, given the full redeemability of USDR at the protocol’s counter. This mechanism is akin to that of other well-known fiat-backed stablecoins, where the assurance of redemption at any time helps maintain the token’s value stability.

​
Security and Governance

​
Security and Auditability

Redemption processes within the RWAX Protocol are governed by smart contracts that are fully auditable. These contracts are designed to ensure that the redemption is only possible if the USDR tokens are legitimately issued and backed by RWAs.

​
Governance Influence

The governance token holders may eventually have a say in how redemption policies are structured or altered, potentially influencing aspects like:

  • Redemption fees
  • Conditions
  • Introduction of new redemption methods

This reflects the protocol’s commitment to community governance and adaptability to market needs.

By offering both direct redemption and secondary market trading, USDR ensures flexibility for users, accommodating both those interested in the underlying real-world assets and those requiring quick digital currency liquidity. This dual approach supports the token’s peg through the balance of direct asset backing and market dynamics.