Rigid Redemptions in yUSD: Ensuring Stability with Fees

In the world of decentralized finance, stability and reliability are paramount. yUSD, the stablecoin offered by EpsiLoan, employs a unique mechanism called Rigid Redemption to facilitate the exchange of yUSD for liquid (re)staked ETH at face value, maintaining stability and trust in the system. Let's delve into the details of how Rigid Redemption works and the associated fees:

Rigid Redemption allows users to exchange their yUSD for liquid (re)staked ETH at a fixed rate, treating 1 yUSD as exactly equivalent to $1 worth of collateral. This ensures a seamless and predictable redemption process, bolstering confidence among users.

While users have the flexibility to redeem their yUSD for lrETH at any time without limitations, a Rigid Redemption fee is charged on the redeemed amount. The prevailing redemption fee, subject to revision by the EpsiLoan DAO, is set at 1%. This fee serves as a mechanism to sustain the stability and integrity of the system.

Example Illustration: Let's consider an example scenario: If the current redemption fee is 1% and the price of lrETH is $2500, and a user decides to redeem 1000 yUSD, they would receive 0.396 lrETH. This calculation accounts for the redemption fee of 1%, resulting in a deduction of 0.004 lrETH from the total redeemed amount.

Additionally, users should be aware that if they choose to deposit collateral funds and redeem others' collateral within a 3-day period, a service fee of 0.1% will be applied. This measure is implemented to discourage short-term deposits and withdrawals, ensuring the stability and efficiency of the redemption process.

In summary, Rigid Redemption in yUSD offers users a reliable and transparent mechanism to exchange their stablecoins for collateral assets, maintaining stability and trust within the EpsiLoan Protocol. While a redemption fee is charged to support the system's operations, users can redeem their yUSD with confidence, knowing that their assets are securely backed by liquid (re)staked ETH.