Buy-Backs¶
Buy-backs let you retire your receipts and their associated obligations.
What is a Buy-Back?¶
When your offer is matched with mint orders, you've sold a commodity volume documented by a system-generated receipt. A buy-back lets you repurchase that volume and retire the receipt and its associated obligation.
Why Buy Back?¶
Lock In Gains When Prices Drop¶
If the reference price drops after you sold a commodity volume, buying it back lets you retire the associated receipts at the lower price and keep the spread you earned.
Example:
| Step | Action | Cash Flow |
|---|---|---|
| 1. Sell commodity volume | Reference $100, 10% spread | Receive $90 |
| 2. Price drops to $80 | ||
| 3. Buy back | Repurchase volume and retire receipts at $80 | Pay $80 |
| Net result | Receipts retired | +$10 |
After retiring, you can submit a new offer at the lower $80 price. If it is matched with mint orders, the system generates new receipts.
Sold the Underlying Asset¶
If you've sold the physical asset backing your receipts (property, storage, inventory), you must retire the associated receipts.
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 receipts:
- 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 receipt retirement
- Useful when you don't hold tokens
Buy-Back and Spread¶
When you buy back, the platform uses the original issue discount (OID) method to determine the accrued and unaccrued spread as of the settlement date. Unlike a burn, the applicable unaccrued spread is not refunded to you; it is forfeited to platform fees.
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¶
- Spread - How spread accrues and forfeitures work
- The Auction - When buy-backs process