Redemption Mechanism

The process by which a stablecoin holder converts tokens back to the reference asset (usually fiat). For centralized fiat-backed stablecoins, redemption is a direct claim against the issuer — typically restricted to accredited or institutional accounts with minimum sizes ($100K+ for USDC institutional redemption, much higher for USDT). Retail holders almost always exit via secondary markets (DEXs, CEXs) rather than primary redemption, which means in stress events the secondary-market price can deviate from the issuer's redemption rate. The strength of the redemption mechanism — who can use it, at what cost, on what timeline — is the load-bearing element of any peg.