What are Redemption Pools?
Learn about a new use case for weighted liquidity pools that can support Protocol Controlled Liquidity and Treasury Token Buybacks.
These are a special type of pool which enable projects to gradually release a token over a configurable period of time in exchange for a specified base token (In some cases this could be releasing a governance token in exchange for LP). Throughout the Redemption Pool time period, users can redeem the base token for the project’s token which contributes to the collective determination of the fair value of that asset.
Previously, only certain base tokens were available as assets (USDC, DAI, ETH, WETH) which projects could accumulate via standard Liquidity Bootstrapping Pools (LBPs) on Fjord, but redemption pools enable the designation of any asset for that role. Why does this matter?
Read on to learn more.