> For the complete documentation index, see [llms.txt](https://vnx.gitbook.io/vnx-global/llms.txt). Markdown versions of documentation pages are available by appending `.md` to page URLs; this page is available as [Markdown](https://vnx.gitbook.io/vnx-global/developer/flows/redeem-flow.md).

# Redeem Flow

*Sequence and timing for redeeming VCHF or VGBP back to fiat or crypto, across direct redemption, proprietary-trade buyback, and optional crypto conversion paths.*

## Overview

A redemption converts VNX-issued stablecoins back into customer value. There are two settlement paths — **direct redemption** (the tokens are cancelled, the fiduciary reserve is reduced, and fiat is wired to the customer) and **proprietary-trade buyback** (VNX buys tokens to its liquidity pool, then settles fiat). Either path optionally converts the proceeds into crypto via the External regulated provider before delivery. Average processing times: fiat path \~1 business day, crypto-conversion option \~3 hours with Travel Rule exchange.

## Actors

| Actor                       | Responsibility                                       |
| --------------------------- | ---------------------------------------------------- |
| Customer                    | Initiates redemption and chooses settlement currency |
| VNX Platform                | Compliance, ledgering, redemption orchestration      |
| Fiduciary Bank              | Holds segregated stablecoin reserves                 |
| VNX Liquidity Pool          | Buyer in prop-trade redemption                       |
| VNX Bank Account            | Releases fiat to customer bank                       |
| External regulated provider | External regulated provider for fiat→crypto          |
| Customer Bank               | Receives redemption fiat                             |

## Sequence diagram

```mermaid
sequenceDiagram
    participant C as Customer
    participant VP as VNX Platform
    participant FB as Fiduciary Bank
    participant LP as VNX Liquidity Pool
    participant VB as VNX Bank Account
    participant CCP as External regulated provider
    participant CB as Customer Bank
    C->>VP: 1. Redemption request
    alt Option 1 — Cancel & redeem
      VP->>FB: 2. Reduce stables reserve
      FB-->>VB: Release fiat
      VB->>CB: Fiat to Customer bank (1 bd)
    else Option 2 — Prop trade
      VP->>LP: 3. Buy stables to pool
      LP-->>VB: Fiat available
      VB->>CB: Fiat to Customer bank (1 bd)
    end
    opt Convert to crypto
      VP->>CCP: 4. Fiat → crypto
      CCP-->>C: Crypto to wallet (≈3h)
    end
    C->>VP: 5. Withdraw proceeds
    C->>VP: Poll querySupplyChanges + queryPayments
```

## Step-by-step

1. Customer instructs VNX to redeem stablecoins from their Platform user account.
2. **Option 1 — Direct redemption:** VNX cancels the tokens, reduces the fiduciary reserve, and wires fiat to the customer per the redemption instruction.
3. **Option 2 — Proprietary trade buyback:** VNX buys the tokens from the customer to the liquidity pool, then settles fiat to the customer bank or back into the customer's Platform account.
4. **Optional crypto conversion:** If the customer chose crypto proceeds, VNX runs fiat→crypto via the External regulated provider; resulting crypto (minus commission) is credited to the Platform account or whitelisted external wallet.
5. Customer withdraws proceeds (fiat or crypto) from the Platform.

## Timing and SLAs

| Step                               | Expected duration | Threshold / note                          |
| ---------------------------------- | ----------------- | ----------------------------------------- |
| Redemption instruction → fiat wire | \~1 business day  | Average per BP                            |
| Optional fiat→crypto conversion    | \~3 hours         | Variable; Travel Rule exchange can extend |

## Edge cases and failure modes

* **Compliance hold or EDD** — failed compliance places the burned token in pending status until enhanced due diligence completes.
* **Daily redemption stress** — redemptions >10% of circulating supply trigger liquidity review and emergency reserve access.
* **Depeg threshold** — >0.5% deviation lasting >24 hours triggers investigation; >1% deviation triggers public disclosure and BMA notification.
* **Travel Rule timeout** — affects crypto-conversion leg only; fiat leg is unaffected.
* **Customer bank rejects** — wire returns; VNX re-credits the customer's Platform account, visible when the client polls `/private/queryPayments`.

## Controls and reconciliation

Direct redemption shrinks the fiduciary reserve in lockstep with the burn; the Safeguard Reserve Account remains ring-fenced and co-mingling is prohibited. Audit-log retention: ≥5 years. M-of-N multi-sig with ≥2 signatories applies to on-chain burn signing.

## Related

* [Integrate Stablecoin Redeem](/vnx-global/developer/guides/integrate-stablecoin-redeem.md)
* [Travel Rule](/vnx-global/developer/concepts/travel-rule.md)
* [Minting and Redemption](/vnx-global/institutional/products/minting-and-redemption.md)
* [Glossary](/vnx-global/glossary.md)