{
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  "schemaVersion": "1.0.0",
  "id": "stablecoin-redemption-arbitrage",
  "canonical": "https://degreesofsatoshi.com/encyclopedia/stablecoin-redemption-arbitrage/",
  "collection": "stablecoins",
  "title": "Stablecoin redemption arbitrage: why a peg can still slip",
  "description": "Follow the economics of buying a discounted stablecoin for redemption and understand how eligibility, costs, delays and reserve concerns can keep a peg away from target.",
  "aliases": [],
  "dates": {
    "published": "2026-10-02",
    "modified": "2026-10-02",
    "verified": "2026-10-02T18:15:23.891Z",
    "dataAsOf": "2026-10-02"
  },
  "authorship": {
    "publisher": "Degrees of Satoshi editorial project",
    "process": "AI-assisted research and drafting with a separate automated source-verification pass; no external expert or named human review is implied."
  },
  "quickAnswer": {
    "text": "Redemption arbitrage can support a stablecoin peg when eligible participants buy tokens below their redemption value and redeem them, or mint and sell above target. The opportunity depends on actual access, costs, timing and confidence that redemption will complete. A theoretical one-dollar claim does not guarantee an immediate one-dollar market price.",
    "claimId": "stablecoin-redemption-arbitrage-quick-answer",
    "sourceIds": [
      "circle-terms",
      "tether-terms"
    ]
  },
  "keyFacts": [
    {
      "label": "Access",
      "value": "Direct minting and redemption depend on issuer eligibility and service conditions.",
      "sourceIds": [
        "circle-terms",
        "tether-terms"
      ],
      "id": "access",
      "claimId": "stablecoin-redemption-arbitrage-fact-access"
    },
    {
      "label": "Costs",
      "value": "Fees and execution costs reduce any gross price difference.",
      "sourceIds": [
        "circle-terms",
        "tether-terms"
      ],
      "id": "costs",
      "claimId": "stablecoin-redemption-arbitrage-fact-costs"
    },
    {
      "label": "Two prices",
      "value": "A secondary-market price and contractual redemption value are distinct.",
      "sourceIds": [
        "circle-terms"
      ],
      "id": "two-prices",
      "claimId": "stablecoin-redemption-arbitrage-fact-two-prices"
    }
  ],
  "prerequisites": [
    "stablecoin-depegging"
  ],
  "sections": [
    {
      "id": "example",
      "heading": "Calculate the gross gap before calling it profit",
      "sourceIds": [
        "circle-terms"
      ],
      "paragraphs": [
        "Suppose an eligible participant can buy 10,000 tokens for $0.99 each and redeem them at $1 each. The gross difference is $100. Trading fees, network costs, banking charges, funding cost and any redemption fee come out of that amount.",
        "These are hypothetical numbers. They do not establish that a current arbitrage exists or that a particular reader can access redemption."
      ]
    },
    {
      "id": "delay",
      "heading": "Time and uncertainty can outweigh a visible discount",
      "sourceIds": [
        "circle-terms",
        "tether-terms"
      ],
      "paragraphs": [
        "A participant must be willing and able to hold the exposure until settlement. Account restrictions, bank processing or issuer service interruptions can delay the cycle.",
        "A market discount can therefore persist even when a redemption target exists. The market may be pricing costs, limited access or doubts about completion."
      ]
    },
    {
      "id": "mint",
      "heading": "The reverse direction also has conditions",
      "sourceIds": [
        "circle-terms"
      ],
      "paragraphs": [
        "If an eligible participant can obtain newly issued tokens at the target value and sell them above it, additional supply can put downward pressure on the premium.",
        "That mechanism still relies on issuance availability and a market able to absorb the sale. It is a process with constraints, not an automatic price-setting switch."
      ]
    }
  ],
  "faq": [
    {
      "question": "Does a discount below one dollar mean risk-free profit?",
      "answer": "No. The apparent gap may be offset by costs, eligibility limits, delays or the risk that redemption or the market trade does not complete as assumed.",
      "sourceIds": [
        "circle-terms",
        "tether-terms"
      ]
    }
  ],
  "claims": [
    {
      "id": "stablecoin-redemption-arbitrage-quick-answer",
      "articleSlug": "stablecoin-redemption-arbitrage",
      "statement": "Redemption arbitrage can support a stablecoin peg when eligible participants buy tokens below their redemption value and redeem them, or mint and sell above target. The opportunity depends on actual access, costs, timing and confidence that redemption will complete. A theoretical one-dollar claim does not guarantee an immediate one-dollar market price.",
      "sourceIds": [
        "source-3f274c8c1e62ebb9",
        "source-42226350ff0e7b0b"
      ],
      "sourceLocators": [
        {
          "sourceId": "source-3f274c8c1e62ebb9",
          "locator": "Sections 1–4, 8, 13, 15–17"
        },
        {
          "sourceId": "source-42226350ff0e7b0b",
          "locator": "Terms of Service; Eligibility; Redemption"
        }
      ],
      "scope": {
        "collection": "stablecoins",
        "dataAsOf": "2026-10-02",
        "blockHeight": null
      },
      "qualification": "",
      "evidenceStatus": "documented",
      "verification": {
        "status": "verified",
        "method": "independent automated source review",
        "checkedAt": "2026-10-02T18:15:23.891Z",
        "reviewer": "Independent automated verification agent verify_bitcoin_stablecoins_100",
        "notes": [
          "Read Circle and Tether issuance/redemption eligibility, fees and suspension conditions. Mechanism is a conditional economic explanation, not assurance of access or completion.",
          "Recomputed 10,000 tokens bought at 99 cents and redeemed at 100 cents: $100 gross difference before costs. Reverse mint-and-sell direction is also conditional."
        ]
      }
    },
    {
      "id": "stablecoin-redemption-arbitrage-fact-access",
      "articleSlug": "stablecoin-redemption-arbitrage",
      "statement": "Access: Direct minting and redemption depend on issuer eligibility and service conditions.",
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      "sourceLocators": [
        {
          "sourceId": "source-3f274c8c1e62ebb9",
          "locator": "Sections 1–4, 8, 13, 15–17"
        },
        {
          "sourceId": "source-42226350ff0e7b0b",
          "locator": "Terms of Service; Eligibility; Redemption"
        }
      ],
      "scope": {
        "collection": "stablecoins",
        "dataAsOf": "2026-10-02",
        "blockHeight": null
      },
      "qualification": "",
      "evidenceStatus": "documented",
      "verification": {
        "status": "verified",
        "method": "independent automated source review",
        "checkedAt": "2026-10-02T18:15:23.891Z",
        "reviewer": "Independent automated verification agent verify_bitcoin_stablecoins_100",
        "notes": [
          "Read Circle and Tether issuance/redemption eligibility, fees and suspension conditions. Mechanism is a conditional economic explanation, not assurance of access or completion.",
          "Recomputed 10,000 tokens bought at 99 cents and redeemed at 100 cents: $100 gross difference before costs. Reverse mint-and-sell direction is also conditional."
        ]
      }
    },
    {
      "id": "stablecoin-redemption-arbitrage-fact-costs",
      "articleSlug": "stablecoin-redemption-arbitrage",
      "statement": "Costs: Fees and execution costs reduce any gross price difference.",
      "sourceIds": [
        "source-3f274c8c1e62ebb9",
        "source-42226350ff0e7b0b"
      ],
      "sourceLocators": [
        {
          "sourceId": "source-3f274c8c1e62ebb9",
          "locator": "Sections 1–4, 8, 13, 15–17"
        },
        {
          "sourceId": "source-42226350ff0e7b0b",
          "locator": "Terms of Service; Eligibility; Redemption"
        }
      ],
      "scope": {
        "collection": "stablecoins",
        "dataAsOf": "2026-10-02",
        "blockHeight": null
      },
      "qualification": "",
      "evidenceStatus": "documented",
      "verification": {
        "status": "verified",
        "method": "independent automated source review",
        "checkedAt": "2026-10-02T18:15:23.891Z",
        "reviewer": "Independent automated verification agent verify_bitcoin_stablecoins_100",
        "notes": [
          "Read Circle and Tether issuance/redemption eligibility, fees and suspension conditions. Mechanism is a conditional economic explanation, not assurance of access or completion.",
          "Recomputed 10,000 tokens bought at 99 cents and redeemed at 100 cents: $100 gross difference before costs. Reverse mint-and-sell direction is also conditional."
        ]
      }
    },
    {
      "id": "stablecoin-redemption-arbitrage-fact-two-prices",
      "articleSlug": "stablecoin-redemption-arbitrage",
      "statement": "Two prices: A secondary-market price and contractual redemption value are distinct.",
      "sourceIds": [
        "source-3f274c8c1e62ebb9"
      ],
      "sourceLocators": [
        {
          "sourceId": "source-3f274c8c1e62ebb9",
          "locator": "Sections 1–4, 8, 13, 15–17"
        }
      ],
      "scope": {
        "collection": "stablecoins",
        "dataAsOf": "2026-10-02",
        "blockHeight": null
      },
      "qualification": "",
      "evidenceStatus": "documented",
      "verification": {
        "status": "verified",
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        "checkedAt": "2026-10-02T18:15:23.891Z",
        "reviewer": "Independent automated verification agent verify_bitcoin_stablecoins_100",
        "notes": [
          "Read Circle and Tether issuance/redemption eligibility, fees and suspension conditions. Mechanism is a conditional economic explanation, not assurance of access or completion.",
          "Recomputed 10,000 tokens bought at 99 cents and redeemed at 100 cents: $100 gross difference before costs. Reverse mint-and-sell direction is also conditional."
        ]
      }
    }
  ],
  "sources": [
    {
      "id": "circle-terms",
      "label": "USDC Terms",
      "publisher": "Circle",
      "url": "https://www.circle.com/legal/usdc-terms",
      "locator": "Sections 1–4, 8, 13, 15–17",
      "note": "Non-EEA USDC holder terms, eligibility, redemption and restrictions; not an unconditional promise to every holder.",
      "version": null,
      "checkedAt": "2026-10-02T17:03:43.080Z",
      "contentSha256": "f3fdef0515875c8fa6359a1303c76e72f78fb396fb2bd09d213f9bd65f055f75",
      "recordId": "source-3f274c8c1e62ebb9"
    },
    {
      "id": "tether-terms",
      "label": "Tether Terms of Service",
      "publisher": "Tether",
      "url": "https://tether.to/en/legal/",
      "locator": "Terms of Service; Eligibility; Redemption",
      "note": "Direct access and redemption depend on current issuer terms and customer eligibility.",
      "version": null,
      "checkedAt": "2026-10-02T17:03:43.707Z",
      "contentSha256": "c1b3340b4a7d30479fbb342895a2c5edbc46561e71271e8e52ec66c8e26c941e",
      "recordId": "source-42226350ff0e7b0b"
    }
  ],
  "related": {
    "articles": [
      "stablecoin-minting-redemption-eligibility",
      "stablecoin-peg-vs-market-price",
      "defi-arbitrage"
    ],
    "dossiers": [],
    "wallets": []
  },
  "revisionHistory": [
    {
      "date": "2026-10-02",
      "kind": "published",
      "summary": "First publication after primary-source research and independent automated verification."
    }
  ],
  "citation": "Degrees of Satoshi editorial project. “Stablecoin redemption arbitrage: why a peg can still slip.” Published 2026-10-02; updated 2026-10-02. https://degreesofsatoshi.com/encyclopedia/stablecoin-redemption-arbitrage/"
}