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Redemption

This chapter describes the principal redemption process at bond maturity. During redemption, investors receive the principal for the bonds they hold, the corresponding bond tokens are burned on-chain, and the bond issuance is closed once the full issued amount has been burned.

Business Flow​

  1. Maturity and Principal Payday:

    • Redemption starts when the bond reaches its principal payday, which is generated for the bond maturityDate.
    • The Core Payment Service processes due PRINCIPAL paydays and prepares the settlement of the full principal amount.
    • Coupon settlement remains separate from redemption. Coupon payments distribute interest only and must not trigger token burning.

  2. Holder Resolution and Payment Creation:

    • The Core Payment Service queries the Indexer for the current bond issuance, the latest finalized checkpoint, and the eligible investors holding the bond.
    • For principal redemption, the payout amount for each investor is calculated as denomination * bondCount.
    • The service creates one issuer settlement payment for the aggregate principal amount and one buyer settlement payment for each investor.

  3. Fiat Settlement via PSP:

    • The issuer is instructed to fund the aggregate principal payment through the Payment Service Provider (PSP).
    • Once the PSP confirms receipt of the issuer funds, the Core Payment Service validates the payment and authorizes investor payouts.
    • After the PSP confirms that investor payouts were sent, the corresponding buyer settlement payments move to SENT.

  4. On-Chain Token Burn:

    • Token burning happens only after investor principal payouts are confirmed as sent by the PSP.
    • For a real buyer settlement payment transition from AUTHORISED to SENT, the Core Payment Service calls burnBondBatch(isin, version, froms, amounts, FINAL_SETTLEMENT).
    • froms contains investor wallet addresses and amounts contains the number of redeemed bonds for each investor.
    • Repeated PSP callbacks must not trigger duplicate burns for payments that were already settled.

  5. Bond Closure:

    • The blockchain emits a BondBurned event after tokens are burned.
    • The Blockchain Event Service forwards the event to the Registry Service as BondRegistryEvents.BOND_BURNED.
    • The Registry Service increments burned_bond_count for the bond identified by isin.
    • Once burned_bond_count == bond_count, the bond is set to BURNED and bondRegistry.closeBond(isin, version) is called on-chain.

Sequence Diagram​