> For the complete documentation index, see [llms.txt](https://jpydf.gitbook.io/jpy-defi/llms.txt). Markdown versions of documentation pages are available by appending `.md` to page URLs; this page is available as [Markdown](https://jpydf.gitbook.io/jpy-defi/borrowing-and-trove-management/redemptions.md).

# Redemptions

JPYdf redemption is an on-chain mechanism, available to anyone, that exchanges JPYdf for collateral (dToken) taken from other Troves. Normal redemption calculates the collateral amount using a reference of ¥1 per JPYdf before fees and the protocol’s redemption price. This is a calculation basis, not a guarantee of the collateral’s market value or sale proceeds. The redeemer receives no fiat yen or bank transfer.

## Effect on price

When JPYdf trades below ¥1, transactions that acquire JPYdf in the market and redeem it become more likely, which tends to move the price back toward ¥1. The strength of this effect depends on the redemption fee, the value of the collateral received, transaction costs, and the conditions for converting dToken back to its underlying asset; no fixed ¥1 floor is guaranteed. Redeemed JPYdf is burned, and the matching collateral leaves the system.

## Fees

The redemption fee is a 0.5% minimum plus the base rate (capped at 100%). With each redemption, the base rate rises according to the share of the total JPYdf supply that was redeemed, and between redemptions it decays with a six-hour half-life. Check the currently displayed rate before redeeming.

## Which Troves are redeemed

Redemptions start from the lowest-rate Troves. Among Troves with the same rate, the one that most recently set or changed its rate is redeemed first. When there are multiple branches, redemptions are split in proportion to each branch's debt that is not covered by its Stability Pool.

In a redeemed Trove, debt falls by the redeemed amount, and collateral falls by the matching amount minus the fee. The collateral equal to the fee stays in the Trove and belongs to the redeemed borrower. Redemption still reduces leverage and collateral holdings at a time the borrower did not choose, so the borrower can miss gains if the collateral price later rises.

A Trove whose debt falls below the minimum debt becomes a **zombie Trove** and leaves the rate-ordered redemption sequence. A Trove that became a zombie through a partial redemption is redeemed first in the next redemption. A zombie Trove still accrues interest and remains subject to redistribution and liquidation. Restoring its debt to the minimum returns it to a normal Trove.

## Redemption risk is separate from liquidation risk

Whether a Trove is liquidated depends on its collateral ratio; the order in which Troves are redeemed depends on their interest rates. Within a branch that receives part of a redemption, a Trove with a high collateral ratio is still redeemed if its rate is low. A setting that makes liquidation unlikely does not make redemption unlikely.

The less debt there is in Troves with lower rates than yours, the debt redeemable before yours, the more easily redemptions reach you. This amount also changes when other borrowers change their rates or repay, so regularly check "Redeemable before you" and the redemption risk shown in the app.

## Redemption price

How the redemption price is determined, and what happens when a price cannot be obtained, is in [How Prices Are Determined](/jpy-defi/collateral-and-pricing/oracle.md). On weekends and holidays when currency markets are closed, JPY/USD stays at the last market rate, so redemptions can execute at a rate that differs from where the market reopens.

## After branch shutdown: urgent redemption

Branch shutdown is irreversible. In that branch, normal borrowing, partial repayment and adjustment, and normal cross-branch redemption stop. Trove owners can still close by repaying in full, and the remaining debt is reduced through liquidation and branch-local **urgent redemption**. Urgent redemption pays out collateral with a 2% bonus, capped by available collateral, and does not use the normal rate ordering or the base-rate fee. The amount that can actually be redeemed depends on the eligible Troves, available collateral, and gas.

> Withdrawing the underlying asset by burning a dToken (in-kind redemption) is a separate mechanism from JPYdf redemption ([dToken](/jpy-defi/collateral-and-pricing/dtoken.md)).