Redemption, explained.The exit is part of the product.
A token is only as good as the way out. For stablecoins and tokenized funds there are usually two exits: redeem directly with the issuer, or sell to someone else on a market. Each has its own price, timing and rules.
Reviewed October 19, 2026 · figures from our live data
The short answer
Redemption means handing the token back to the issuer and receiving cash or the underlying asset. It is usually limited to approved, verified holders.
Tokenized funds redeem at net asset value (NAV), often with cut-off times, settlement delays and minimum amounts set by the issuer.
Selling on a secondary market is open to more people and can be faster, but the price can differ from NAV or from one dollar.
Issuers can delay, gate or suspend redemptions under their terms. Read those terms before buying.
Two ways out
Most holders never redeem with the issuer. Knowing both paths explains why prices sometimes drift.
- 1
Primary redemption
You return tokens to the issuer, it burns them and pays you. For a fiat stablecoin this is cash at par; for a fund it is cash at NAV.
- 2
Who can redeem
Redemption rights are set by the issuer. Many limit them to onboarded customers who passed KYC, sometimes with a minimum size.
- 3
Secondary market
You sell the token on an exchange, DEX or OTC desk. Anyone with access to that venue can sell, and settlement is often immediate.
- 4
Why prices align
If a token trades below its redemption value, those who can redeem buy it cheaply and redeem at par or NAV. This arbitrage pulls the price back.
- 5
When they diverge
If redemption is slow, restricted or suspended, arbitrage weakens and the market price can stay below NAV or below one dollar.
- 6
Wrapped or bridged versions
A token on another chain may be a wrapped copy. Redeeming it may first require bridging or unwrapping to the original token.
Terms to read before you buy
These details sit in the fund documents or stablecoin terms of the issuer.
- 1
NAV and pricing time
Funds calculate NAV at set times. A redemption request is filled at the next NAV after your request, not the last one you saw.
- 2
Cut-off times
Requests after the daily cut-off move to the next business day. Weekends and bank holidays can add delay.
- 3
Settlement
Cash may arrive the same day or several days later, depending on the fund’s assets and the payment rails used.
- 4
Minimums and fees
Issuers can set minimum redemption sizes and charge fees. Small holders may have no practical route except the secondary market.
- 5
Gates and suspensions
Fund terms can allow limits on daily outflows or a full suspension in stress. Stablecoin terms can allow delays or blocked addresses.
- 6
Who stands behind it
Check which legal entity owes you the money, where it is regulated, and what happens to reserves if it fails.
Questions
Can I redeem a stablecoin for dollars directly?+
Only if the issuer accepts you as a redemption customer, which usually requires KYC and sometimes a minimum amount. Most people sell on an exchange instead.
What does NAV mean for a tokenized fund?+
Net asset value is the value of the fund’s assets minus liabilities, divided by the number of tokens or shares. Redemptions are paid at NAV.
Why is my token trading below NAV?+
Usually because redemption is restricted, slow or costly, so arbitrage does not close the gap. Low liquidity on the venue can also widen it.
Can an issuer stop redemptions?+
Yes, if its terms allow it. Fund documents often include gates or suspension clauses for stress periods.
- Tokenized money market funds →
- What happens if a token issuer fails →
- Largest dollar stablecoins →
- Tokenized treasuries with low minimums →
- BUIDL vs BENJI →
This guide explains how these products work and is not investment advice or an offer of any security. Who may buy a product is set by its issuer; check the offering documents before investing.