Redeem or hold
The core decision: convert a position back into $SWA supply, or keep it for the dividend stream.
This is the decision the whole protocol is built around. You open a pack, roll a position, and after a short unlock you choose: convert it back into $SWA supply, or keep it and collect what it pays. You cannot do both with the same position.
30-minute sell window
Newly opened packs cannot be redeemed for the first 30 minutes. The claim interface shows a countdown on each reveal. When the timer hits zero you may sell that supply for $SWA — or keep holding. The delay exists so opens are not instant flip liquidity against the pool.
The two paths
Redeem
After unlock, redemption exchanges the position for $SWA at its prevailing backing, less the protocol's cut. Illustratively, a pack reveal of 100 units is presented as about $1 of $SWA supply. You receive liquid token supply. The position returns to the pool, and the dividend stream attached to it goes with it. This is the liquid, certain option — and it is permanent.
Hold
Holding keeps the position and its dividend stream. Payments accrue for as long as you keep it, and you retain the option to redeem later at whatever backing prevails then. This is the patient option: no immediate proceeds, an uncertain but potentially larger total.
The break-even
The comparison reduces to a simple question: how long must you hold before dividends exceed what redemption would have paid you today?
Let B be the position's backing, r the protocol cut on redemption, and y the trailing dividend yield. Redeeming today yields B × (1 − r). Holding yields B × y per year in dividends. Setting them equal:
years to break even = (1 − r) ÷ y
A position yielding 4% takes roughly 0.96 ÷ 0.04 ≈ 24 years for dividends alone to replace the redemption proceeds — assuming a 4% redemption cut. That number looks damning, and taken alone it would be. It is the wrong number to anchor on, for two reasons.
Why the naive break-even misleads
First: you keep the position. Redemption is a sale — you give up the asset. Holding, you retain both the dividend stream andthe underlying exposure, which you can redeem later. The correct comparison is not “dividends versus proceeds” but “dividends plus the position's future backing versus proceeds today.” On that basis holding wins unless you expect backing to fall or you need the liquidity.
Second: dividends compound if reinvested. Income taken and used to buy more $SWA increases your weight in future distributions, which increases the positions you receive, which increases income. The naive calculation assumes a flat stream and no reinvestment.
r is published. Treat the 4% used in the example as illustrative arithmetic, not as the rate.Side by side
| Redeem | Hold | |
|---|---|---|
| Proceeds | Immediate, in $SWA | Accrue over time, as dividends |
| Certainty | Known at the moment you act | Depends on the issuer maintaining its payout |
| Ongoing exposure | None — the position is gone | Retained, with its price risk and upside |
| Effect on $SWA supply | Increases circulating supply | Leaves supply in reserve |
| Reversible | No | Yes — you can redeem later |
| Best when | You want liquidity, or doubt the payout | You want income and diversified exposure |
When redeeming is the right call
- You need liquidity. The plainest reason, and a perfectly good one. An income stream you cannot spend is not useful if you need the capital now.
- You doubt the dividend. If you believe the issuer will cut or suspend its payout, the yield attached to the position is a historical figure describing something that is about to stop.
- The position is tiny. Very small fractional positions may not be worth tracking. Consolidating them into $SWA can be the tidier outcome.
- You are more bullish on $SWA. Redemption is effectively a swap from equity exposure into token exposure. If you expect the token to outperform the pool, that swap is rational.
- Concentration. If distributions have left you heavily weighted in one name or sector relative to your preference, redeeming selectively is how you rebalance.
When holding is the right call
- You want the income. The dividend stream is the reason the position exists. Redeeming forfeits it entirely.
- You are building the index. Systematically redeeming defeats the accumulation described in Synthetic ETF. The index only forms if you let positions accumulate.
- The tier is durable. Blue Chip and Dividend Aristocrat positions are selected for payout consistency. They are the ones most likely to reward patience.
- You would only re-buy anyway. Redeeming into $SWA and then buying more $SWA to increase your weight is a longer path to the same place, and it pays the 3% buy tax on the way.
The mixed strategy
Nothing requires a single policy across your whole holding. Each position is decided independently, which makes a split approach natural: hold the tiers selected for payout durability, redeem the volatile or very small positions, and recycle the proceeds into $SWA to raise your weight in future distributions.
That last step is what turns the loop into a flywheel. Redeemed value becomes weight, weight becomes larger future distributions, and the positions worth keeping accumulate. It also means the tax matters: recycling through $SWA incurs the 3% buy tax, so the flywheel is not free. See Tax.