Redeeming

Redeeming is the name of the process where the user returns a Roam token to the protocol in exchange for collateral. The protocol burns the redeemed Roam token and pays the user approximately $1.00 worth of value in USDC and Roam token. The ratio of USDC and Roam 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 Roam token paid to the user is the sum of 100% minus the ECR percentage.

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