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.
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:
| Outcome | Fee / settlement |
|---|---|
| 1. Sale completes | Early redemption fee applies |
| 2. Cancelled before lock | No fee |
| 3. Bond matures before the sale clears | Standard maturity fee, not early resale fee |
| 4. Issuer bond call while pending | Forced settlement, no broker sale |
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 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 Maturity 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 invokesforceCloseRevokedHolderfor 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.
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Terms acceptance: The off-chain broker sale terms are covered by the Bond Token Terms Acceptance, which every holder accepts alongside Bondi's other published legal documents when completing KYC in the Bondi Institutional app.
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Minimum lot: The minimum applies to the total accumulated batch, not to each individual request, smaller positions can participate.
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Cancellation: Available before the batch locks and maturity; Bond Tokens and any accrued pending coupons are returned.
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RV shares: Non-transferable receipt tokens minted 1:1 with deposited Bond Tokens; burned at settlement or cancellation.
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Market risk: Redemption price reflects the batch execution price and may differ from the reported oracle price.
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Processing time: Typically takes T+1 for execution and T+5 for settlement after the lock, driven by broker execution and onramping.
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Fee: Charged on gross resale proceeds only if a sale completes; not charged on cancellations or maturity fallback. See Fees.