Redeeming nTokens

nTokens are redeemable for a proportional share of all the assets in the nToken account.

Upon redemption, users can elect to receive a single net cToken amount by converting their share of the nToken account's net fCash positions to cTokens via the on-chain liquidity pools. The entire redemption process occurs in the space of a single transaction.

Redeeming nTokens in detail

At the time of redemption, the nToken portfolio will be holding -ve fCash and the liquidity tokens which were collected from each pool where liquidity was earlier distributed.

1. Redemption starts with a user sending their nToken to the nToken account.

1. nToken account would then redeem the liquidity token of the underlying pools.

1. The nToken account will receive the Cash and fCash by redeeming the liquidity tokens. This redemption of liquidity tokens will occur at the pool proportion at the time when redemption occurs.

NOTE: It is likely possible that the pool proportion at the time of minting nTokens is different that that of the time when redeeming. This creates an imbalance between the -ve fCash (which was held by the nToken account) and the +ve fCash (which was received by redeeming the LT).

1. The imbalance in -ve fCash and +ve fCash is what we call the net fCash position.

...it is clear that if a user's portfolio has higher -ve fCash (obligation) than +ve fCash (claim on Cash), the user is in a net borrowing position. If the inequality is reversed, it would be a net lending position.

Context: Liquidity provider's portfolio

1. The net fCash position is set off by either swapping +ve fCash for Cash (if the net fCash results in a net Lending position) or by swapping Cash for +ve fCash (if the net fCash results in a net Borrowing position) in the relevant liquidity pool.

1. Now, since the nToken account has resolved the imbalance between the +ve fCash and the -ve fCash, a user can have their investment back.