Selling Back

Maya holds eTSLA, backed by a reserve of the real thing and insured by a pool of crypto - now let's close her loop and turn it back into USDC.

Selling is where a design shows its character. Anyone can promise you an easy entrance; the honest question is whether the exit still works when things go wrong - when no dealer answers, when the market is closed, when a backing layer fails. Own's answer is a waterfall of exits, each one standing behind the one before it. Let's walk down it.

Exit one: ask the dealer (the everyday path)

The fast way out is the same door Maya came in through. She asks a market maker for a price, gets back a firm quote - a sell price it commits to, signed and short-lived - and submits it onchain. In one transaction the protocol checks the quote (same signer registry, same settle band), pulls USDC from the maker's settlement wallet to hers, and burns her eTSLA. The protocol's obligation shrinks with the burn. Done in seconds; this is what almost every seller uses.

She can also be patient. A resting redeem order is a standing instruction - "sell my eTSLA at this price or better" - that escrows her tokens with the contract and waits. A maker can fill it, fully or in pieces, whenever it can beat her floor. She can cancel anytime and get her tokens straight back.

Exit two: take the stock itself (instant, no dealer)

Now suppose no maker is quoting - it's 3 a.m. on a Sunday, or spreads are ugly, or the firm's systems are down. Maya doesn't need them.

The PSM - the converter we met in Chapter 4 - lets any holder redeem eTokens in kind, straight against the Reserve Vault: hand in eTSLA, receive tokenized TSLA at the oracle-derived ratio. No quote, no fee, no waiting, no permission. Whenever the reserve covers it, this door is simply open - and because it needs no live dealer, it keeps working outside market hours, and even for an asset that's been permanently halted (it pays out at the frozen halt price for as long as reserve remains).

This is the quiet superpower of holding a fully reserved token: the exit is sitting in a vault, not in a company's goodwill.

Exit three: wait out the claim window

But what if the reserve is short - say a burst of fresh mints hasn't been backfilled - and no maker is filling her resting order? Now Maya is in the one situation the system treats as an emergency: a redeemer is captive in a way a buyer never is. (An unfilled mint just leaves you holding your USDC; an unfilled redeem leaves you holding a token you want out of. That asymmetry is why everything in this chapter exists for sellers.)

Her resting order now starts a clock. The protocol has a global claim threshold - 48 hours in the launch design - measured from when the order was placed. The delay is deliberate: it's the grace period for a fair maker quote to show up, because the final exit prices at the bare oracle rate with no spread, and the system would rather someone competes for her order first.

Exit four: force-execute (the guarantee)

If the clock runs out and her order still isn't filled, Maya settles it herself - no maker, no operator, no one's cooperation.

She calls force-execute on her order, pointing it at one of the collateral vaults the protocol has pre-approved as an insurance source for that asset, and supplying two pieces of fresh, signed evidence:

  • the asset's current oracle price, which must be genuinely current (no older than a couple of minutes) and must clear the floor she set on her order;
  • the collateral's current oracle price, used to convert what she's owed into that vault's collateral.

If the evidence checks out, the contract values her eTokens at her limit price, releases that much of the vault's collateral directly to her, burns her escrowed tokens, and shrinks the protocol's exposure to match. She walks away paid from the LP insurance pool, at the oracle price - which is precisely the risk LPs are being paid yield to carry.

   THE REDEMPTION WATERFALL

   1 · NORMAL      maker fills in USDC          instant, quoted spread
         │  no fill?
         ▼
   2 · IN-KIND     PSM pays out the wrapper     instant, permissionless,
         │  reserve short?                       works off-hours
         ▼
   3 · WAIT        claim threshold (~48h)       grace for a fair quote
         │  still nothing?
         ▼
   4 · GUARANTEE   force-execute                paid from LP collateral
                                                 at the oracle price

   As long as reserves + collateral cover the tokens (the 65% rule),
   every eToken can exit at full oracle value - with or without any maker.

Two details show the care in this design. Force-execution is fail-safe by default: an asset with no approved insurance vaults, or a claim threshold that's never been set, simply has the path disabled until governance arms it - nothing can be forced against a vault that wasn't explicitly signed up for the job. And a forced claim is stabilizing, not destabilizing: it removes the same dollar amount from exposure and from collateral, so the system's utilization strictly improves with every claim paid. A run on the guarantee deleverages the protocol instead of toppling it.

The last resort of all: a halted asset

One more door, for the rarest case. If an asset must be wound down permanently

  • imagine its underlying is delisted - an operator halts it at a fixed settlement price. From then on, holders redeem at that frozen price from a dedicated halt fund, and the PSM keeps honoring in-kind exits at the same price while reserve remains. Even the end of an asset's life is an orderly exit, not a trapdoor.

A note for LPs: exits take a beat

Closing the loop for the other side of the marketplace: LPs leave through a request-and-wait queue - 72 hours at launch - and a withdrawal only clears if the collateral left behind keeps the system inside its solvency cap. The insurance can't sprint for the door at the moment it's needed. (If a vault is ever halted in an emergency wind-down, its LPs exit instantly instead - the queue protects a healthy pool, not a failing one.)

What just happened

  • Selling has a waterfall of exits: maker quote (instant, everyday), PSM in-kind redemption against the reserve (instant, permissionless, works off-hours and even for halted assets), then the guarantee.
  • A resting redeem order escrows her tokens with a price floor; if it goes unfilled past the claim threshold (~48 hours in the launch design), she can force-execute.
  • Force-execute pays her from an approved LP collateral vault at the fresh oracle price - verified onchain, no maker needed - and burns her tokens.
  • The path is fail-safe (disabled until governance approves vaults and sets the threshold) and self-stabilizing (every claim paid improves system utilization).
  • Halted assets settle at a frozen price from a halt fund; LP withdrawals wait out a 72-hour queue gated by the solvency cap.

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