Withdrawal

This section explains the redemption mechanism for cTokens

How to withdraw liquidity from the vaults

When an earner wants to withdraw liquidity from the protocol, they will redeem or burn their cTokens.

Due to the fact that the funds allocated in the vaults are either deposited on other money markets, being used or reserved to protect loans, the protocol might limit redemption rates and allow users to withdraw their funds as liquidity becomes available.

In order to guarantee trust and transparency, the protocol will calculate onchain the availability of funds by considering liquidity requirements for active protections, utilization rates in money markets, scheduled and forecasted cToken redemptions and decide if redemption is immediately available or if the withdrawal enters into a redemption queue.

These calculations will be executable by any user by running an onchain function. This guarantees mathematically that their funds will be redeemed in X period of time.

Besides this onchain verification mechanism, the UI will clearly communicate the withdrawal expected time to the user and automatically transfer funds to the user wallet as they become available.