Bond Token Redemption
Redemption is the final stage of the Bond Token lifecycle, where token holders receive principal repayment (at maturity), sale proceeds (when exiting early), or call proceeds (when the issuer exercises a bond call). This stage completes the full investment journey from issuance through coupon payments to settlement.
Overview
Standard path (most holders): At maturity, the issuer repays principal, Bondi registers the net amount onchain, and Bond Token holders redeem directly through the Distribution contract on the Bondi frontend.
Other paths (alternatives):
• Issuer bond call: The issuer exercises the call provision, redeeming part or all of the outstanding Bond Tokens at the contractual call price (see Issuer Bond Calls below).
• Early redemption (optional, before maturity): A holder deposits Bond Tokens into the Redemption Vault to seek an off-chain broker sale. Requests pool until the combined position meets the minimum institutional lot size, at which point the batch locks for broker execution. Coupons earned during the pending period are paid at settlement or returned on cancellation alongside the Bond Tokens. An early redemption fee applies only when a sale completes; holders may cancel before the batch locks for a full return; if the bond matures first, the vault settles through Distribution instead (see Redemption Vault outcomes).
Bond Call vs. Early Redemption
An issuer bond call is initiated by the bond issuer and applied pro-rata to all holders at the call ratio. Early redemption is initiated by an individual holder through the Redemption Vault. The two mechanisms are independent.
Maturity Redemption
When the underlying bond reaches its maturity date, principal is registered for holders and they redeem the principal against their Bond Tokens. This is the standard end-of-life redemption path for the product.
Maturity Redemption Flow Diagram
How Maturity Redemption Works
The maturity process combines traditional settlement with onchain principal distribution:
1. Principal repayment
The bond issuer pays principal into the regulated segregated account (the "Cell") administered by Ensuro Re Ltd. at maturity.
2. Currency conversion
Funds are converted from fiat currency to stablecoins where applicable.
3. Onchain principal registration
The Distribution Safe (Admin in the diagram above) calls Distribution.setPrincipal(principalAmt). The contract reverts if the bond has not yet reached maturity (block.timestamp < maturityDate). Commission is deducted using the immutable principalCommissionBps set at deployment time per Bond Token and distributed to Bondi and its configured distribution partners; the net principal amount is stored onchain. Once registered, principalSet = true and principal redemption is immediately live — holders can call redeemPrincipal directly on Distribution.
4. Holder redemption
Wallet holders with valid KYC call redeemPrincipal on Distribution, burn Bond Tokens, and receive their pro-rata share of net principal. Vault share holders — vbtXXX (Reinvestment Vault) and RV shares (Redemption Vault) — follow separate settlement paths through their vault contracts rather than calling Distribution directly. See right below.
Vault Settlement at Maturity
Vault share holders are not Bond Token holders directly — their positions settle through the vault, not through a direct redeemPrincipal call on Distribution. The diagram below shows both paths once principal is deposited and registered onchain.
Redemption Vault (RV shares): Bondi Admin Safe triggers redeemPrincipalFromDistribution on the vault batch; the vault calls Distribution internally, Admin fulfills the batch, and the relayer redeems each depositor's RV shares. Applies when Bond Tokens are still in the pending batch at maturity — see Redemption Vault outcomes, outcome 3.
Reinvestment Vault (vbtXXX): At maturity, the holder exits through redeem or withdraw on the vault — not by calling Distribution directly. KYC-verified holders receive all stable (principal redeemed from Distribution plus any pending coupon or call stable); non-KYC-verified holders never receive distribution stable — principal is paid as Bond Tokens, pending coupon or call stable is swapped to Bond Tokens or recorded as entitledStable, and principal is redeemed at Distribution after completing KYC. See Compliance at Reinvestment Vault Exit.
Maturity Redemption Features
• Pro-rata distribution: Each token redeems for its proportional share of registered net principal.
• Onchain verification: Principal registration and redemptions are recorded onchain.
• Redemption fee: Applied when principal is registered; holders receive net amounts. See Fees.
• Solvency accounting: Principal is registered onchain with explicit liability tracking. Redemptions are bounded by the registered principal liability — payouts can never exceed the principal set aside for distribution.
Maturity date updates
If the underlying bond issuer extends the bond's legal maturity in traditional markets before principal is registered onchain, the Admin Safe calls Handler.extendMaturity(newDate) to mirror that date onchain. Bondi does not unilaterally extend maturity — the onchain timestamp is updated only to reflect a change already made by the issuer in the underlying bond markets. Extension is only permitted while principalSet is false, the new date is strictly later than the current maturity, and no bond-call freeze is active. Once principal is registered, maturity is final.
If the issuer instead redeems bonds ahead of the scheduled maturity date, that is an issuer bond call — partial or full — so not handled through maturity redemption. A full call retires the entire outstanding issue at the contractual call price.
Unclaimed Principal Safety Net
The standard path is for holders to self-redeem via redeemPrincipal(burnAmt) on the Bondi frontend. This section describes a safety-net measure for holders who have not redeemed long after maturity.
After relayerPrincipalRedemptionDelayMonths have elapsed past the bond's maturity date (default: 12 months), Bondi's relayer may call redeemPrincipalForUser(user, burnAmt) on behalf of any holder who still has not redeemed. This is not a routine operation — it is a last-resort mechanism to ensure no holder's principal is left permanently unclaimed. The holder receives the exact same payout they would have received by self-redeeming. This delayed safety-net path is wallet-only: it is not used for vault positions. Redemption Vault positions are settled by Bondi promptly after maturity, and Reinvestment Vault positions are settled via users calling the vault's standard redeem / withdraw flow (which routes to principal redemption once principalSet is true).
Issuer Bond Calls
Bond issuers may exercise the call provision on their bonds, redeeming part or all of the outstanding Bond Tokens at the contractual call price. Each holder's position is reduced pro-rata and settled in stablecoins. Sequential partial calls are supported — each call is registered and executed on its own, and any uncalled Bond Tokens remain outstanding until a later call or maturity.
When a call is registered, Bond Tokens enter a full onchain freeze: no transfers, DEX trades, vault deposits, mints, principal redemptions, or complianceBurn can proceed — the only allowed state change is the relayer burning each holder's callable slice via executeCallForUser. Bondi runs this relayer pass immediately and the freeze typically lasts only minutes; transfers resume automatically once every holder in the snapshot has been processed.
Issuer Bond Call Flow
1. Segregated Account Funds Distribution
The regulated segregated account (the "Cell") administered by Ensuro Re Ltd. transfers the gross stablecoin amount for the call into the Distribution contract.
2. Call Registration
The Distribution Safe (Admin in the diagram above) calls Distribution.registerCall(callAmount, callRatioBps). Commission is deducted using the immutable principalCommissionBps set at deployment time per Bond Token and distributed to Bondi and its configured distribution partners. The net call liability, a per-token call price, and the registration block are recorded onchain and emitted in CallAnnounced(callId, blockNumber, callRatioBps, callPricePerBt, netAmount). A solvency check is run at the registration time. registerCall immediately triggers a full Bond Token freeze — nothing else can move onchain until the relayer pass below is complete.
3. Holder Snapshot
Bondi's orchestrator snapshots all Bond Token holder balances at the snapshot block in CallAnnounced — the registerCall block — recording each holder's balance at that point in time (same pattern as CouponAnnounced).
4. Relayer Execution
While the freeze is active, Bondi's relayer works through the snapshot holder by holder via executeCallForUser(callId, user, expectedBalance) — one address per transaction, using the balance recorded in step 3. Each holder's callable slice is burned and settled (or entitlement recorded where KYC is missing). Once every holder in the snapshot has been processed, the freeze lifts automatically and normal transferability resumes.
• KYC or Bondi Vault: If the address is a KYC-verified wallet or a whitelisted Bondi vault (Reinvestment/Redemption), the callable Bond Token amount is burned and stablecoins are paid in the same transaction. For whitelisted vaults, Distribution also triggers registerCall on the vault in the same transaction. For the Redemption Vault, the called slice becomes claimable once the vault is processed and Bondi's relayer then redeems for each depositor (a 100% call settles the entire pending batch this way). Any uncalled remainder stays pending and is handled through a later broker resale or maturity.
• No KYC: The callable Bond Tokens are burned and the stablecoin payout amount is recorded for the holder to claim after KYC completion.
Claiming After a Bond Call
Eligible addresses are settled automatically by the relayer — Bond Tokens burned and stablecoins paid in the same transaction. Here, "eligible" means KYC-verified wallet holders and whitelisted Bondi vaults (Reinvestment/Redemption). One additional path exists for holders who did not have KYC at the time the relayer processed them:
No KYC at call time: If a holder's KYC was not valid when the relayer processed them, their callable Bond Tokens were already burned at that point and the stablecoin entitlement is recorded onchain. Once KYC is completed, the holder can claim their stablecoin payout through the Bondi frontend via claimCall(callId).
Vault Settlement on Bond Call
Whitelisted Bondi vaults (Reinvestment Vault and Redemption Vault) are processed through the same executeCallForUser entry point as wallet holders — see the vault branch in the Issuer Bond Call Flow diagram above. Distribution burns the vault's callable Bond Tokens, pays call proceeds, and triggers registerCall on the vault in a single transaction. What happens next depends on which vault holds the Bond Tokens:
Redemption Vault (RV shares, batch pending): The called slice of each depositor's pending Bond Tokens settles immediately from call proceeds — no minimum-lot wait and no broker sale for that portion. Admin fulfills the called batch; the relayer redeems each depositor's RV shares. A 100% call settles the entire pending batch this way. Any uncalled remainder stays in the batch under the normal early-redemption rules. See Redemption Vault outcomes, outcome 4.
Reinvestment Vault (vbtXXX): Call proceeds are recorded as pendingCallStable inside the vault. From there, three things can happen to that stablecoin: Bondi can reinvest it into Bond Tokens via reinvestCallStable when the pool can absorb the swap; a KYC-verified holder can unwind their own slice directly via claimCallProceeds without fully exiting the vault, typically to free up cash or delever a Morpho position; or it settles pro-rata for every holder on exit via redeem or withdraw. A bond call is often an institutional-size event that the Bond Token pool cannot absorb in a single swap at a fair price, which is why distributing or unwinding — rather than forcing a reinvestment — is often the right call. Either way, the share price is unaffected at the moment of the call: the value simply shifts from Bond Token form into stable form within the same vault. On redeem/withdraw, the vault first tries to swap each holder's pro-rata call slice into Bond Tokens — the normal exit path. If the swap clears, everyone receives Bond Tokens. If it cannot clear within the holder's tolerance, KYC-verified holders receive Bond Tokens plus their slice as stablecoin; non-KYC-verified holders receive Bond Tokens and the slice is recorded as entitledStable for claim after KYC. Or, if they prefer, a KYC-verified holder can choose redeemToBTAndStable to take the call slice as stable directly, with no swap. See Why Unwinding Exists, Compliance at Reinvestment Vault Exit, and Called Bonds in the Reinvestment Vault.
Early Redemption (Redemption Vault)
Corporate bonds trade in large minimum blocks — typically around $200,000 per transaction in the institutional market. A Bondi holder with a $5,000 position cannot approach a broker and request an early exit on their own; the lot size simply does not qualify. The Redemption Vault solves this by pooling exit requests from multiple holders until the combined Bond Token position meets the minimum required for a block sale. Once that threshold is reached, the batch locks and the Cell's broker can execute the sale as a single institutional transaction.
This is an alternative path — not how most holders exit. Holding to maturity is the standard experience; selling on secondary markets is the other common route. The Redemption Vault exists for situations where neither of those works: the holder needs to exit early and onchain secondary market liquidity is insufficient for their position size.
Early Redemption Flow Diagram
How Early Redemption Works
1. Request
The holder deposits Bond Tokens into the Redemption Vault through the platform. The vault mints the same number of non-transferable Redemption Vault (RV) shares to the holder's wallet as a receipt. Bond Tokens are not burned yet — they stay in the vault while the request is pending.
2. Accumulation toward minimum lot
Individual requests pool together in one batch. Because corporate bond sales require a minimum position size, the batch must reach minRedemptionAmount in total Bond Tokens before it can be sent for broker execution. Until that threshold is reached, a holder can cancel: Bond Tokens are returned, plus any coupon amounts that accrued while pending. Once the minimum is met, the batch locks and cancellation is no longer available.
Exception: At maturity, the vault can fulfill the pending batch against registered principal even if it never reached minRedemptionAmount. After an issuer bond call, only the called portion settles from call proceeds (no minimum-lot wait and no broker sale for that slice); any uncalled remainder continues under the normal lock and resale rules until it is resold or the bond matures.
For basket Bond Tokens, the Redemption Vault is deployed at the largest constituent off-chain minimum lot size. As that binding constituent matures or amortizes out of the basket, Bondi lowers minRedemptionAmount (decrease-only; floor: 10 BT × number of surviving constituents) so holders can lock and trigger off-chain redemption on the surviving names. Single-name vaults leave the deploy-time threshold unchanged.
3. Coupons while pending
If a coupon is paid while the holder's request is still in the pending batch, they earn a pro-rata share of that coupon. It is paid together with their redemption proceeds at settlement, or returned on cancellation.
4. Broker sale and fulfillment
Each requestRedeem must be at least 10 BT ($1,000 face) in whole 10-BT increments. After lock, the Cell's broker executes the block sale. At fulfillment, Bondi passes excludedOwners for any late joiners not included in the off-chain sale; the batch is priced and fulfilled against the remaining pending total. Gross stablecoin proceeds arrive in the vault; the early redemption fee (see Fees) is deducted and the batch is fulfilled at a single exchange rate for all depositors in that batch.
5. Settlement
Bondi's relayer pays each holder their net stablecoins and burns their Bond Tokens and RV shares. Processing typically takes T+1 for execution and T+5 for settlement after the lock, driven by broker execution and onramping. An emergency onchain self-claim path exists for holders if the relayer cannot complete payout.
Redemption Vault outcomes
Depositing into the Redemption Vault does not guarantee an off-chain sale. Four outcomes are possible:
1. Sale completes (early redemption fee applies): The batch accumulates enough Bond Tokens to meet the minimum lot size, locks, and the broker executes the block sale. Proceeds are registered and fulfilled in the vault at a single exchange rate. The early redemption fee is deducted from gross proceeds, and coupon amounts accrued while pending are paid alongside settlement. The relayer pays each depositor net stablecoins plus their coupon share. See Fees.
2. Cancelled before lock (no fee): If the batch has not yet reached the minimum lot size and principal distribution has not started, the holder may cancel. Bond Tokens are returned along with any coupon amounts accrued while pending.
3. Bond matures before the sale clears (standard maturity fee, not early resale fee): If the bond reaches maturity while Bond Tokens are still in the vault — because the batch never accumulated enough for a sale, or no sale completed in time — cancellation is no longer possible. See Vault Settlement at Maturity for the Redemption Vault settlement diagram. The standard maturity redemption fee applies; the early resale fee does not.
4. Issuer bond call while pending (forced settlement, no broker sale): If the issuer calls the bond while a batch is pending, settlement of the called amount comes from the call proceeds rather than a broker sale. The called portion of each depositor's pending Bond Tokens is redeemed at the issuer's contractual call price: those Bond Tokens are burned, the stablecoin proceeds are paid into the vault, and that portion becomes claimable immediately — with no minimum-lot wait and no broker sale. See Vault Settlement on Bond Call for the Redemption Vault settlement diagram and step-by-step flow.
If the issuer calls the full position, the entire batch is settled this way and nothing remains pending. If the call is partial, only the called fraction settles now; the remaining Bond Tokens stay in the pending batch and continue toward a broker sale or maturity exactly as before (and remain cancellable while the batch is still below the minimum lot). The early redemption fee does not apply to the called portion — it settles at the issuer's call price. The standard redemption fee applies to call proceeds (the same principalCommissionBps commission deducted when Distribution.registerCall registers the call, as for maturity principal).
Early Redemption Terms
• KYC required: KYC is enforced at vault entry (requestRedeem) and on claim payout (redeem/withdraw). Once a holder's batch is economically settled — broker resale, maturity fulfillment, or a full issuer bond call — Bondi's relayer redeems every KYC-valid holder in that batch as the intended service path; users do not need to send a transaction. When the relayer reaches a holder who is KYC-revoked, it skips them; after all other KYC-valid holders in the batch are paid, Bondi invokes forceCloseRevokedHolder for onchain accounting cleanup.
Where a partial bond call left an uncalled pending remainder, restoring KYC lets the holder self-claim what is already claimable and receive relayer payout when that remainder settles in a later batch. On force-close, the holder's claimable Bond Tokens are burned (resale/maturity slice; the call slice was burned upstream), stablecoin proceeds are transferred to the Admin Safe, and their claim counterpart becomes Bondi pending resolution under applicable law.
• Participation agreement: Before submitting a request, holders are asked to sign the Bond Token Participation Agreement covering the off-chain broker sale terms.
• Minimum lot: The minimum applies to the total accumulated batch, not to each individual request — smaller positions can participate.
• Cancellation: Available before the batch locks and maturity; Bond Tokens and any accrued pending coupons are returned.
• RV shares: Non-transferable receipt tokens minted 1:1 with deposited Bond Tokens; burned at settlement or cancellation.
• Market risk: Redemption price reflects the batch execution price and may differ from the reported oracle price.
• Processing time: Typically takes T+1 for execution and T+5 for settlement after the lock, driven by broker execution and onramping.
• Fee: Charged on gross resale proceeds only if a sale completes; not charged on cancellations or maturity fallback. See Fees.