# Subscription & Redemption

## **Traditional Private Fund Redemption Rules, Processes, and Limitations**

In traditional finance, private fund redemptions are more restrictive and complex than public funds due to underlying asset complexity. Key compliance rules include:

#### **1. Redemption Rules**

* **Lock-Up Periods**: Typically **6 months to 3 years**, prohibiting early redemptions.
* **Redemption Windows**: Most funds offer **quarterly/semi-annual** windows (open for **5-10 business days**).
* **Redemption Limits**: Minimum **$100,000** per redemption; maximum **20%-30%** of fund size.
* **Processing Time**: **10-30 business days** post-approval (subject to asset liquidity).

#### **2. Redemption Process**

<figure><img src="/files/Y15oieyIpEVcsQVxWLWT" alt=""><figcaption><p>Traditional ETF Redemption Workflow</p></figcaption></figure>

* **Submission**: Investors file **written redemption requests** (with identity verification) during open windows.
* **Valuation**: Fund managers confirm redemption NAV within **3-5 business days** (using **T+3/T+5** pricing).
* **Settlement**: Funds disbursed within **10-30 business days** (depends on asset liquidation).
* **Fees**: **1%-5% redemption fee** (tiered: lower fees for longer holdings).

***

## **QQQAI Token ($QQQAI) Redemption Rules and Process**

QQQAI Token($QQQAI) is an RWA token representing shares in the QQQAI private fund. Each token corresponds to 1 fund share, redeemable by burning tokens.

#### **1. Redemption Mechanism**:&#x20;

Decouples on-chain RWA redemptions from traditional fund processes:

* **Small Redemptions (≤$100K)**: Instant via DEX liquidity pools or OTC.
* **Large Redemptions (>$100K)**: Processed via the **SPV** to ensure compliance and security.

#### **2. Large Redemption Rules**

* **Threshold**: Triggers at **≥100K per transaction or ≥500K daily cumulative**.
* **Timing**: Aligns with fund redemption windows (typically quarterly).
* **Fees**:
  * **Gas Fees**: Paid by users for on-chain token burning and stablecoin redemptions.
  * **Admin Fees**: **0.5%-1% of redemption amount** (covers SPV operations and fiat conversion).

#### **3. Large Redemption Workflow**

<figure><img src="/files/3qqr75kIfKlLHMmtIeWw" alt=""><figcaption><p>$QQQAI Large Redemption Workflow</p></figcaption></figure>

**Step 1 | On-Chain Application**

* Users submit **on-chain redemption requests** (signed wallet address + amount) via BlockRock.
* The system verifies token holdings and KYC/AML status.

**Step 2 | SPV Trigger**

* Excess redemptions trigger smart contracts to freeze $QQQAI tokens and notify the SPV.
* The SPV initiates traditional redemption with the fund manager within **2 business days**.

**Step 3 | Fiat Conversion**

* Redeemed funds are transferred to the SPV’s custodial account (Coinbase Custody).
* The SPV converts USD to USDC at real-time rates.

**Step 4 | On-Chain Settlement**

* Smart contracts burn the frozen $QQQAI tokens and release equivalent USDC to the user’s wallet.
* Total processing time: **10-35 business days** (depends on traditional fund processes).

#### **4. Risk Controls**

* **Price Deviation Protection**: Requires user reconfirmation if NAV fluctuates **±5%** during redemption.
* **Liquidity Reserves**: The SPV maintains a **5% USDC reserve** to mitigate exchange rate risks.
* **Audit Trails**: On-chain redemption records are shared with auditors (e.g., Chainalysis) for traceability.


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