Redeeming

Redeeming is the name of the process where the user returns a UPFI token to the protocol in exchange for collateral. The protocol burns the redeemed UPFI token and pays the user approximately $1.00 worth of value in USDC and UPS token. The ratio of USDC and UPS token paid to the user is determined by the Effective Collateral Ratio (ECR). The ECR percentage equals to the percentage of USDC token the user receives in the redeeming process, while the percentage of UPS token paid to the user is the sum of 100% minus the ECR percentage.

Example: If you would like to redeem 1,000 UPFI tokens and the ECR percentage is 85%, then you should receive 850 USDC token and 150 USDC worth of UPS token.