💰Redemptions
Redemption of wstETH Collateral in Hedgehog Protocol
Step 1: Assessing Your Position
Before initiating the redemption process, it's essential to evaluate your current standing within the protocol. Ensure that:
Position Status: Your collateralized debt position (CDP) is in good standing, i.e., it's not under-collateralized or at risk of liquidation.
Market Conditions: Understand the market conditions, particularly if you plan to sell your Basefee tokens in the open market before redemption. The value of these tokens could fluctuate based on Ethereum's network congestion.
Step 2: Repaying the Debt
To redeem your wstETH, you must first return the Basefee derivative tokens you minted. This step involves repaying the "debt" incurred when these tokens were created.
Visit the Protocol's Interface: Log into your account on the protocol's platform, navigating to the section detailing your CDPs.
Initiate the Repayment: Select the option to repay your debt. You'll need to specify the amount of Basefee tokens you're returning to the protocol, effectively burning them. This quantity should correspond to the number of tokens initially minted (plus any applicable fees accrued over the period).
Step 3: Confirming the Transaction
After initiating the repayment, you'll need to confirm the transaction, allowing the protocol to burn the Basefee tokens and adjust your CDP accordingly.
Review the Details: Double-check the number of Basefee tokens you're repaying and any transaction fees that apply. Ensure that you're settling the total amount required to fully close your position.
Execute the Repayment: Confirm and submit the transaction. Wait for it to be processed. This step might take some time.
Step 4: Redeeming Your Collateral
With the debt repaid, your wstETH collateral is no longer tied up in the CDP. You can now withdraw it from the protocol.
Initiate the Withdrawal: On the protocol's interface, find the option to withdraw collateral. The system will prompt you to enter the amount of wstETH you wish to redeem.
Confirm the Withdrawal: Review the transaction details, ensuring everything is correct. Confirm and execute the withdrawal transaction, then wait for the process to complete.
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