Redeem

Users can withdraw during the cycle buffer period, i.e., the 6 to 24 hours between the end of the previous lending cycle and the start of the new one. Alternatively, users can use the Queue contract to schedule their withdrawal while a cycle is running. The exit request will be processed by the pool curator at the first available buffer period.

While deposits happen in a single step, withdrawals are a two-step process happening during two different cycles:

1

Spending approval

To allow Pareto’s smart contract to process users’ LP tokens exit request

2

Withdrawal request

A user requests to redeem funds (principal and/or accrued interest) at the end of Cycle I.

3

Funds claim

At the end of the following cycle (Cycle II), the borrower repays interest and any requested withdrawals. Users who requested to exit can now claim their funds.

Upon completion of steps 1, and 2

• The user’s wallet will reflect a reduction in the Credit Vault LP tokens representing his position in the pool

• The user will need to claim his stablecoins representing his initial deposit, plus any interest generated after the new lending cycle starts

Early exit

When the interest rate of the next lending cycle is lower than the previous one by 1% or more (or otherwise provided in the Credit Agreement), lenders are entitled to an early exit and can redeem funds with a shorter waiting period, i.e., within 72 hours.

For example, a lender requests a withdrawal on Jan 31 during Cycle I, where the interest rate is 15%. If the Cycle II rate drops to 12%, the lender qualifies for an early exit and can claim his funds 72 hours after Cycle II starts (i.e., on Feb 3).

Similarly, users can use the Queue contract to schedule their redemptions while a cycle is running. Users will queue a withdrawal request, which will be processed by the pool curator at the first available buffer period.