Crypto glossary
Mint and redeem (stablecoin issuance)
Minting and redeeming is how stablecoins are created and destroyed: approved clients send money to the issuer for new tokens or return tokens for cash.
Fiat-backed stablecoins have a primary market and a secondary one. In the primary market, verified clients such as exchanges, market makers and payment firms wire money to the issuer, which mints new tokens to their address; when they redeem, they send tokens back, the issuer burns them and pays out the money. Everyone else buys and sells on exchanges and DeFi pools, the secondary market.
This two-way door is what holds the peg. If a dollar stablecoin trades at 0.99, arbitrageurs buy it cheaply and redeem it for one dollar; at 1.01, they mint new coins and sell them. Mint and burn data, published on-chain, is also watched as a sign of fresh money entering or leaving crypto markets.
Access is limited. Issuers set minimum amounts, fees, identity checks and banking hours, and can pause redemptions or reject clients. When only a few firms can redeem, or banks are closed during a weekend panic, the secondary price can drift from par even if reserves are intact.
Example
When a dollar stablecoin dips to 0.995 during a sell-off, a market maker buys 10 million tokens on exchanges and redeems them with the issuer for 10 million dollars, pocketing the difference minus fees.