Buy-Backs¶
Buy-backs let you retire your obligations and get your receipts back.
What is a Buy-Back?¶
When your offer matches, you've sold a receipt and taken on an obligation. A buy-back reverses that—you pay to retire the obligation and get your receipt back.
Why Buy Back?¶
Lock In Gains When Prices Drop¶
If the reference price drops after you sold receipts, buying back lets you retire your obligation at the lower price and keep the spread you earned.
Example:
| Step | Action | Cash Flow |
|---|---|---|
| 1. Sell receipts | Reference $100, 10% spread | Receive $90 |
| 2. Price drops to $80 | ||
| 3. Buy back | Retire at $80 | Pay $80 |
| Net result | Obligation retired | +$10 |
After retiring, you can issue new receipts at the lower $80 price if desired.
Sold the Underlying Asset¶
If you've sold the physical asset backing your receipts (property, storage, inventory), you must retire the associated obligations.
Free Up Capacity¶
Buy-backs reduce your reserve balance, freeing capacity for new offers.
Types of Buy-Backs¶
Token Buy-Back¶
Use tokens you hold to retire obligations:
- Tokens you own are retired
- Your receipt obligation is reduced equally
- No cash changes hands
Use case: You acquired tokens through trading or transfers.
USD Buy-Back¶
Pay cash at the current reference price:
- You pay USD based on current reference price
- Immediate obligation reduction
- Useful when you don't hold tokens
Buy-Back and Financing¶
When you buy back, the unaccrued financing you've paid is not refunded like it is with burns.
Example:
| Item | Value |
|---|---|
| Total financing | $1,000 |
| Time elapsed | 6 of 12 months |
| Accrued (earned) | $500 |
| Remaining (unearned) | $500 |
| Buy-back | 50% of position |
| Forfeited | $250 |
Creating a Buy-Back Order¶
Token Buy-Back¶
| Field | Value |
|---|---|
| Order Type | Buy-Back Token |
| Quantity | Receipts to retire |
| Time in Force | Day or GTC |
Requirements:
- Must hold sufficient tokens
- Cannot exceed your obligations
USD Buy-Back¶
| Field | Value |
|---|---|
| Order Type | Buy-Back USD |
| Quantity | Receipts to retire |
| Time in Force | Day or GTC |
Requirements:
- Must have sufficient USD balance
- There must be sufficient offer orders in the auction to fulfill the token obligation.
- Effectively handled as a mint order and then a burn of the tokens purchased.
- Cannot exceed your obligations
Processing¶
Buy-backs are processed during the daily auction:
- Token buy-backs run first (before mints)
- USD buy-backs run during the mint phase
Next Steps¶
- Financing - How financing accrues and forfeitures work
- The Auction - When buy-backs process