Redeem
The process of exchanging stablecoin tokens for their underlying fiat currency value, effectively burning the tokens.
Redemption is the reverse of minting. An institution sends USDC tokens back to the issuer, and the issuer sends back the equivalent dollars from reserves. The tokens are burned (permanently destroyed), reducing the total supply.
This redemption guarantee is what gives USDC its value. As long as you trust that Circle will honor redemptions, 1 USDC is worth $1. Retail users typically "sell" USDC on exchanges rather than redeeming directly, but the ability to redeem underpins the entire system.
Related Terms
Mint
The process of creating new stablecoin tokens by depositing an equivalent amount of fiat currency.
USDC (USD Coin)
A regulated, fully-backed stablecoin pegged to the U.S. dollar. Each USDC is redeemable for $1.
Reserves
The pool of real-world assets (U.S. Treasuries, cash) held to back each USDC token at a 1:1 ratio.
Peg
The target price a stablecoin is designed to maintain, typically $1.00 for dollar-pegged stablecoins.
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This definition is provided for educational purposes. USDC.org is an independent resource and is not affiliated with Circle Internet Financial.