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 $100,000 per redemption; maximum 20%-30% of fund size.
Processing Time: 10-30 business days post-approval (subject to asset liquidity).
2. Redemption Process
Submission: Investors file written redemption requests (with identity verification) during open windows.
Valuation: Fund managers confirm redemption NAV within 3-5 business days (using T+3/T+5 pricing).
Settlement: Funds disbursed within 10-30 business days (depends on asset liquidation).
Fees: 1%-5% redemption fee (tiered: lower fees for longer holdings).
QQQAI Token ($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:
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
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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