# Minting and Redeeming

Detailing the process of minting and redeeming BD-Stables

## Minting

All BD-Stable tokens are fungible with one another and entitled to the same proportion of collateral no matter what collateral ratio they were minted at. This system of equations describes the minting function of the Blindex Protocol:

**Example A: Minting BD-Stable (BDEU - EUR pegged stable) at a collateral ratio of 100% with 0.05 ETH (ETH/EUR = 4000) **

**Example A: Minting BD-Stable (BDEU - EUR pegged stable) at a collateral ratio of 100% with 0.05 ETH (ETH/EUR = 4000)**

To be explicit, we can start by finding the BDX needed to mint BDEU with 0.05 ETH (`worth 200 EUR`

) at a collateral ratio of 1.00

Thus, we show that no BDX is needed to mint BDEU when the protocol collateral ratio is 100% (fully collateralized). Next, we solve for how much BDEU we will get with the 0.05 ETH worth 200 EUR.

**Example B: Minting BDEU at a collateral ratio of 80% with 0.03 ETH worth 120 EUR (ETH/EUR = 4000) and BDX/EUR =2.**

**Example B: Minting BDEU at a collateral ratio of 80% with 0.03 ETH worth 120 EUR (ETH/EUR = 4000) and BDX/EUR =2.**

First, we need to figure out how much BDX we need to match the corresponding amount of ETH.

Thus, we need to deposit 15 BDX alongside 0.03 ETH (worth 120 EUR) under these conditions. Next, we compute how much BDEU we will get.

`150 BDEU`

are minted in this scenario. `120 BDEU`

are backed by the value of ETH as collateral while the remaining `30 BDEU`

are not backed by anything. Instead, BDX is burned and removed from circulation proportional to the value of minted algorithmic BDEU.

## Redeeming

**Example D: Redeeming 170 BDEU at a collateral ratio of 65%, effective collateral ratio of 100%, effective BDX coverage ratio = 100%, ETH/EUR = 4000 and BDX/EUR = 3.75. **

**Example D: Redeeming 170 BDEU at a collateral ratio of 65%, effective collateral ratio of 100%, effective BDX coverage ratio = 100%, ETH/EUR = 4000 and BDX/EUR = 3.75.**

Redeeming `170 BDEU`

returns `170`

EUR of value to the redeemer: `0.027625 ETH`

(worth `110.5 EUR`

) from the collateral pool and `15.867 of BDX `

(worth `59.5 EUR`

) from BDX reserves (stored in BDEU treasury) at the current BDX market price.

**Example E: Redeeming 170 BDEU at a collateral ratio of 65%, effective collateral ratio of 60%, effective BDX coverage ratio = 75%, ETH/EUR = 4000 and BDX/EUR = 3.75. **

**Example E: Redeeming 170 BDEU at a collateral ratio of 65%, effective collateral ratio of 60%, effective BDX coverage ratio = 75%, ETH/EUR = 4000 and BDX/EUR = 3.75.**

Redeeming `170 BDEU`

returns `0.0255 ETH`

(worth `102 EUR`

) of value to the redeemer from the collateral pool and `13.6 of BDX `

(worth `51 EUR`

) from BDX reserves (stored in BDEU treasury) at the current BDX market price. Please note that `170 BDEU`

were exchanged for the value of only `152 EUR`

. This is an important modification to the original FRAX protocol. In times when collateralization is low, we prevent the early dumpers from benefitting from leaving the protocol early at the expense of faithful holders.

Additionally, there is a 1 block delay parameter (adjustable by governance) on withdrawing redeemed collateral to protect against flash loans.

#### NOTE: These examples do not account for the mint and redeem fees, which are set to 0.3%

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