What is Mint & Redeem?
Glossary · Pricing
Mint and redeem is the primary-market mechanism that keeps a backed tokenized asset aligned with its underlying. Authorized parties mint new tokens when shares are deposited into custody and redeem tokens to release the shares. This arbitrage loop is what pulls a token's price back toward its net asset value (NAV).
How mint and redeem keeps the peg
When a token trades above NAV (a premium), it becomes profitable to deposit shares, mint new tokens, and sell them — which adds supply and pushes the price back down toward NAV. When it trades below NAV (a discount), redeeming tokens for the underlying does the reverse. This creation-and-redemption arbitrage is the same force that keeps exchange-traded funds near NAV, applied on-chain.
When the mint-and-redeem path is slow, costly, or paused, the arbitrage cannot operate freely — which is a common reason a tokenized asset drifts into a persistent premium, discount, or, at the extreme, a de-peg.
Frequently asked questions
Why does mint-and-redeem matter for the price?
It is the arbitrage that keeps a backed token near its NAV. When minting or redeeming is paused or expensive, that arbitrage stalls and the token can drift to a premium or discount.
Related terms
- NAV Premium & Discount — NAV premium (or discount) is the gap between a tokenized asset's on-chain market price and its net asset value (NAV) — the value of the underlying share or fund.
- De-Peg & Tracking Error — A de-peg (or tracking error) is when a tokenized asset's price drifts away from the value of the share or fund it represents.
- Tokenized Equity — A tokenized equity is a blockchain token that represents ownership of, or economic exposure to, a real company share.
Informational only · not financial advice. See the live data on the newsroom. · ← All glossary terms