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# Minting and Redeeming

### Minting USDs

To mint new USDs, minters only need eligible collateral. No fee required for minting USDs. Currently the protocol is accepting USDC, DAI, FRAX and VST as collateral and more tokens might be added to this list in future. However, USDs tokens are fungible and redeemable in the same way, independent of their underlying minting collateral. It acts as an IOU on the pooled collateral.
The protocol will mint 1 USDs by collecting 1 USD worth of collateral.
Collateral tokens required = No of USDs minted/Price of collateral in USD
When a collateral token is worth less than 1 dollar, it will be treated with its actual market price. However, when it is worth more than 1 dollar, it will be treated as 1 dollar. Hence, USDs will always be fully collateralized or over-collateralized.

### Redeeming USDs

Redeeming 1 USDs at the protocol level always gives the user $1 back in collateral after deducting redemption fee. Redeemers can choose from the list of eligible collaterals that they want to receive. A portion of USDs redeemed is collected as redemption fee by the protocol. The protocol will redeem 1 USDs following this simple equation: $Collateral = USDs - Fee$ Fee = 0.2% of USDs amount redeemed Collateral tokens unlocked = 99.8% * No of USDs redeemed/Price of collateral in USD Aggregate collateral ratio (or CR = Total Value Locked/USDs Circulating Supply) should be close to 100% as USDs are backed by stablecoins and collateral is expected to hold their price even in situations of market volatility. However, in an extreme situation if the value of locked collateral changes and collateral ratio drops significantly, SPA will be minted to pay users$1 worth of collateral (+ SPA)