Redemptions: burn tokens in exchange for a share of assets held by an organization

The Redemptions app gives token holders the right to redeem tokens in exchange for a proportional share of “eligible” assets held by a vault or agent app.

The redemptions app exposes 3 permissions:

The Add and Remove tokens permissions will typically be granted to a voting app, or set up initially and then discarded (to ensure the rules cannot change).

The Redeem tokens permission would typically be assigned to Any Entity, but it can also be parameterized with an ACL oracle like the one provided by the Dandelion Voting (LINK) app to conditionally restrict redemptions based on their interactions with the organization.

The main redemptions screen will show the user all “elgigble” assets and balances held by the Vault or Agent app that the Redemptions app was initialized. Hovering over a token will present the option to remove the token (likely requiring a vote) from the list of eligible tokens, additional Tokens can also be added by clicking “Add Tokens”:

The primary action is to redeem tokens, which will bring up a transaction panel that looks like this:

Redemptions is broadly useful for organizations because it provides basic “exit rights”. Simply having the option to “take your toys and go home” significantly changed the dynamics of collaboration within an organization.

The Moloch DAO and Dandelion org template both leverage this primitive as a way to facilitate collaborative grant giving.

An org could use Autark’s projects app to assign tasks using the organization token rather than DAI, and use redemptions to guarantee that those token are approximately equivalent to paying in cash. The person receiving the tokens would then have the option to hold onto the token and become a stakeholder in the organization, or cash out immediately.

Redemptions also has interesting properties when it is used in combination with Aragon Fundraising. When both apps are installed token holders have the option to either sell via the bonding curve reserves, or redeem for working capital. The Bonding curve will generally always offer a better deal since the market maker will factor in speculative value, but if there is a run on the bank the redemptions app will effectively make it so that working capital becomes functionally part of the bonding curves liquidity pool.