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Redemption Mode

What Are Redemptions?​

Redemptions are a key mechanism that helps maintain DORI's peg to $1 without relying on centralized assets or third parties.

A redemption allows a user to swap DORI for collateral at face value

(1 DORI = 1worthofcollateral).WhenthepriceofDORIfallsbelow1 worth of collateral). When the price of DORI falls below 1, arbitrageurs can redeem DORI for collateral, reducing the DORI supply and helping restore its peg.

💵
DORI
You Send
→
🔄
WeissFi Protocol
Processes Redemption
→
🔷
SUI / haSUI / xBTC
You Receive

Key Features​

💱
1:1 Face Value
1 DORI = $1 of collateral
📊
Peg Stability
Maintains DORI at $1
🎯
Arbitrage Opportunity
Profit when DORI < $1
🔐
Decentralized
No centralized assets needed

How It Works:​

  1. The redeemer sends DORI to the protocol.
  2. In return, they receive collateral (the redemption fee is deducted from the borrower's collateral).
  3. Redemptions are processed from borrowers with the lowest collateral ratio.

This ensures market-driven stability and maintains the DORI peg.

How Do Redemptions Affect Borrowers?​

When a redemption occurs:

  • A portion of the borrower's collateral is used.
  • Their debt is reduced proportionally.
  • Borrowers do not lose USD value — the system adjusts both debt and collateral.

Example:​

Before RedemptionAfter Redemption
Collateral10,000 units9,500 units
DORI Debt5,000 DORI4,750 DORI
Fee0.5% + dynamic (deducted from borrower's collateral)✅

💡 Borrowers do not lose funds in USD terms — redemptions simply rebalance debt and collateral.

Redemption Fees​

  • A small fee is applied to each redemption.
  • The fee is based on the amount redeemed and recent redemption volume.
  • Starts at 0.5% and decays over time if redemptions slow down.

How the Fee Works:​

  • When someone redeems $1000 DORI with a 0.5% fee:
    • Protocol deducts 0.5% ($5) from the borrower's collateral
    • Redeemer receives $995 worth of collateral
    • Protocol keeps the $5 fee
    • Borrower effectively pays the fee through reduced collateral

✅ The protocol collects a small fee from the borrower's collateral, while the redeemer receives slightly less than face value.

💡 If DORI is trading at or above $1, redemptions are unlikely to occur.

How to Protect Yourself from Redemptions​

The risk of being redeemed depends on:

  • Your Interest Rate – Borrowers with the lowest rates are redeemed first.
  • The Price of DORI – If DORI is equal or above $1, redemptions are not profitable.

To reduce your redemption risk:​

  • 📈 Set a higher interest rate – This moves you further down the redemption queue.
  • 🧠 Monitor redemption activity – Stay informed on how much DORI is being redeemed.

To Summarize​

  • 🔄 Redemptions keep DORI stable and are only triggered when DORI < $1.
  • ✅ Borrowers don’t lose value in USD terms — only collateral and debt are adjusted.
  • 📊 By understanding how redemptions work, you can strategically manage borrowing and minimize risk.