> ## Documentation Index
> Fetch the complete documentation index at: https://rootsfi.mintlify.site/llms.txt
> Use this file to discover all available pages before exploring further.

# Redemptions

# Redemptions in Roots Protocol

## Overview

Redemption is a key mechanism within the Roots protocol that allows users to exchange MEAD stablecoins for a corresponding value of underlying collateral, at face value. This process plays a crucial role in maintaining MEAD's price peg to \$1.

<Info>
  ## Redemption Fee

  A variable Redemption Fee is charged when users redeem MEAD for collateral directly. This fee is paid in MEAD.

  * **Fee Range:** Typically \~0.5% - 5% (as mentioned in "Getting Started").
  * **Purpose:** The redemption fee helps to regulate the frequency and volume of redemptions, preventing abuse of the mechanism and contributing to protocol revenue or stability measures.
</Info>

## How it Works

<Steps>
  <Step title="Initiate Redemption">
    A user holding MEAD can choose to redeem it for a portion of the collateral held within the Roots system.
  </Step>

  <Step title="Collateral Allocation">
    The protocol determines which collateral assets are provided to the redeemer. This is typically done by targeting the riskiest Troves (those with the lowest collateral ratios) first. (Refer to "Risk Management" for more on how Trove risk is assessed).
  </Step>

  <Step title="Fee Deduction">
    The Redemption Fee is deducted from the amount of collateral the user receives.
  </Step>
</Steps>

## Impact on Trove Holders

If a user's Trove is targeted for redemption (because it is among the riskiest), a portion of its collateral is used to fulfill the redemption request. The corresponding amount of debt in that Trove is cleared. Trove holders do not directly pay the redemption fee; it is paid by the redeemer.

<Tip>
  Redemptions are a normal part of the system designed to maintain stability. Users can minimize the chance of their collateral being redeemed by maintaining a healthy collateral ratio significantly above the Minimum Collateralization Ratio (MCR) detailed in "Getting Started".
</Tip>