# Redemption

## ASC redemption process

ASC redemption is a reverse process of minting. That is, the central bank uses ASC in exchange for collateral and CRS. The ASC will be burned after the exchange to reduce the circulating supply.
When the average trading price of ASC obtained from the oracle is lower than $0.95, the Ceres protocol triggers the redemption process and increases the collateral ratio after the redemption. The total value of the collateral and CRS exchanged for redemption is$1, in which the collateral value is $1 multiplied by the square of the collateral ratio, and the rest of the value is provided by CRS. Besides, it should be noted that the value of the collateral being exchanged would not exceed the current average trading price of ASC. For example, suppose that the current ASC average trading price is$0.9 and the collateral ratio is 0.8. Under such conditions, if an ASC is redeemed, the Ceres protocol transfers $0.64 worth of collateraland$0.36 worth of CRS into the central bank, and the ASC will be burned. Again, assume that the current ASC average trading price is $0.6, and the collateral ratio is 0.8. When one ASC is redeemed, the system transfers$0.6 worth of collateral and $0.4 worth of CRS into the central bank, and the ASC will be burned. The ASC used for redemption comes from the central bank. The smart contract directly calls the ASC from the central bank. #### Redemption formula $R = Min (0.05 * C * Cp, V * Vp)$ R stands for ASC redemption quantity C stands for ASC circulating supply V stands for the value of collateral and CRS locked in the central bank Cp stands for circulation regulation coefficient Vp stands for reserve regulation coefficient #### Collateral ratio regulation formula $CRa = CRb + 0.25\% * Rp$ CRa stands for the collateral ratio after regulation CRb stands for the collateral ratio before regulation Rp stands for collateral ratio regulation coefficient For example, suppose that the ASC average trading price is$0.9, the current circulating supply of ASC is 60,000,000, the value of the collateral and CRS locked in the central bank is $10,000,000, the circulation regulation coefficient is 0.2, the reserve regulation coefficient is 0.5, and the collateral ratio regulation coefficient is 0.5. ASC redemption quantity R is calculated according to the redemption formula: $R = Min (0.05 * 60,000,000 * 0.2, 10,000,000 * 0.5)$ M = 600,000 The collateral ratio after regulation is calculated according to the collateral ratio regulation formula: $CRa = 0.8 + 0.25\% * 0.5$ $CRa = 0.8125$ Quantity of collateral and CRS required for ASC redemption: $T= \frac{R*CR^2}{Pc}$ $S= \frac{R* (1-CR^2) }{Ps}$ T stands for the quantity of collateral required for redemption S stands for the quantity of CRS required for minting R stands for ASC redemption quantity CR stands for collateral ratio Pc stands for the price of collateral Ps stands for the price of CRS Assume that the collateral price is$0.9995 and the CRS price is \$3. The quantity of collateral and CRS obtained by the redemption can be calculated as follows:
$T = \frac{600,000 * 0.8 * 0.8 }{0.9995} = 384192$
$S =\frac{600,000 * (1 - 0.8 * 0.8) }{3} = 72000$