Redemption Pathway
Definition
The end-to-end operational route by which a holder of a tokenized claim converts that claim back into the underlying asset at par, including every intermediary, control, latency, and condition that gate the conversion. A Redemption Pathway is defined by its narrowest point under stress, not by its capacity in ordinary conditions.
Notes
Redemption is the property a tokenized claim is for. A token whose redemption is conditional, gated, suspendable, or operationally fragile has not preserved the claim it represents — it has substituted a new claim with weaker properties. The Redemption Pathway is the unit of analysis through which the strength of that preservation is examined.
The pathway is examined under stress, not under steady state. In ordinary conditions, most redemption architectures perform adequately. In stressed conditions — concentrated redemption demand, custodian operational failure, banking partner disruption, chain congestion — the pathway's narrowest point determines whether redemption holds. A pathway that admits no narrow point under any plausible stress is sound; a pathway whose narrowest point is unknown is, by definition, not assessable.
See also
Reserve Custody Architecture · Settlement Finality · Settlement Recovery · Tokenized Value Settlement
References
- ↩ Guiding and Establishing National Innovation for U.S. Stablecoins (GENIUS) Act of 2025, § 4 (reserve and redemption requirements). paulhastings.com
- ↩ Financial Stability Board, High-level Recommendations for the Regulation, Supervision and Oversight of Global Stablecoin Arrangements: Final Report, Recommendation 9 (redemption rights). fsb.org