When you invest in Liquid Tokenized Portfolios (LTPs), two key mechanisms make it all work: minting and redemption. These processes ensure that LTP tokens always reflect their true underlying value. Here's everything you need to know.
What is Minting?
Minting is the process of creating new LTP tokens by depositing USDC.
Think of it like this: when you mint an LTP, you're exchanging your USDC for a newly created token that represents ownership of a diversified portfolio of assets.
How Minting Works
Step 1: You deposit USDC
You send USDC to the LTP. The minimum deposit is typically $10.
Step 2: The system calculates the current NAV
NAV (Net Asset Value) is the total value of all assets in the LTP portfolio divided by the number of tokens in circulation. This tells you exactly how much one LTP token is worth.
For example:
If the LTP holds $1,000,000 in assets
And there are 100,000 tokens in circulation
The NAV is $10 per token
Step 3: New tokens are created for you
Based on the current NAV, the platform calculates how many LTP tokens to mint for your deposit.
Using the example above:
You deposit $100 USDC
Current NAV is $10 per token
You receive 10 LTP tokens
Step 4: Your USDC is converted into portfolio assets
After minting, your deposited USDC is used to buy the underlying assets in the LTP portfolio according to the current target weights. This happens behind the scenes.
For example, if you deposit into $SOLECO:
Your USDC is automatically used to buy the 25 Solana ecosystem assets
In the exact proportions defined by the portfolio
All managed by the Lore team
Key Point: You Always Mint at NAV
When you mint, you receive LTP tokens at their true Net Asset Value. This means you get a fair price based on the exact value of the underlying portfolio at that moment.
No premium, no discount, just the real value of the assets you're buying into.
What is Redemption?
Redemption is the reverse of minting. It's the process of exchanging your LTP tokens back into USDC.
When you redeem, your LTP tokens are burned (destroyed), and you receive USDC based on the current value of the underlying portfolio.
How Redemption Works
Step 1: You submit your LTP tokens for redemption
You send your LTP tokens to the redemption address and notify the platform you want to redeem.
Step 2: The system calculates your share of the portfolio
The platform determines what percentage of the total LTP you own, and therefore what portion of the underlying assets you're entitled to.
For example:
You hold 100 LTP tokens
There are 10,000 tokens total
You own 1% of the portfolio
Step 3: Your portion of the assets is converted to USDC
The platform sells your proportional share of each asset in the portfolio for USDC.
If the LTP holds 25 different tokens:
1% of each of those 25 tokens is sold
All converted to USDC
At current market prices
Step 4: You receive USDC (minus fees)
After the conversion, a small redemption fee is deducted (typically 0.4%), and you receive the net proceeds in USDC.
Key Point: You Always Redeem at NAV
Just like minting, redemption happens at the true Net Asset Value. You get back USDC equal to your share of the portfolio's current value.
You bear any trading slippage from selling the underlying assets as the redeemer, which keeps pricing fair for all LTP holders.
Why Mint and Redeem Matter
1. Fair Pricing
Minting and redemption at NAV ensure that LTP tokens always trade close to their true value on secondary markets.
If the token price on an exchange drifts above NAV, market makers can mint new tokens at NAV and sell them at the higher price, bringing the price back down.
If the price drifts below NAV, market makers can buy cheap tokens and redeem them at NAV, bringing the price back up.
This arbitrage mechanism keeps LTP prices stable and fair.
2. Liquidity
Mint and redeem functionality provides a reliable way to enter and exit positions at fair value, even if secondary market liquidity is temporarily thin.
3. Transparency
Because minting and redemption happen at live NAV, you always know exactly what you're getting. No hidden fees, no price manipulation — just transparent, real-time portfolio value.
Common Terms Explained
NAV (Net Asset Value): The total value of all assets in the portfolio divided by the number of tokens in circulation. This is the "fair price" of one LTP token.
Mint: Creating new LTP tokens by depositing USDC.
Redeem: Destroying LTP tokens to receive USDC back.
Market Maker: A professional trader who provides liquidity by buying and selling LTP tokens on exchanges, using mint/redeem to keep prices aligned with NAV.
Arbitrage: The practice of exploiting price differences. Market makers buy low and sell high between secondary markets and primary mint/redeem, which keeps prices fair for everyone.
Slippage: The difference between expected and actual execution price when trading. In redemption, you bear the slippage from selling the underlying assets.
Redemption Fee: A small fee (typically 0.4%) charged when you redeem LTP tokens back to USDC. This fee goes to the LTP creator and platform.
Example: Minting $SOLECO
Let's walk through a real example with $SOLECO, the Solana Ecosystem LTP:
Current state:
$SOLECO holds 25 Solana ecosystem tokens
Current NAV: $12.50 per token
You want to invest $500
The minting process:
You deposit $500 USDC
System calculates: $500 ÷ $12.50 = 40 tokens
40 $SOLECO tokens are minted to your wallet
Your $500 USDC is used to buy proportional amounts of all 25 underlying Solana tokens
The LTP now has slightly more of each asset, and 40 more tokens in circulation
What you own:
40 $SOLECO tokens in your wallet
Each token represents a share of the 25-asset Solana portfolio
As the Solana ecosystem grows, your token value grows with it
Example: Redeeming $SOLECO
Now let's say you want to exit your position:
Current state:
You hold 40 $SOLECO tokens
Current NAV: $15.00 per token (the portfolio has grown!)
You want to redeem back to USDC
The redemption process:
You send your 40 tokens to the redemption address
System calculates your share: 40 tokens × $15.00 = $600 gross value
The platform sells your proportional share of all 25 underlying tokens for USDC
Redemption fee (0.4%): $600 × 0.004 = $2.40
Net proceeds: $600 - $2.40 = $597.60 USDC
Result:
You deposited $500 originally
You received $597.60 back
Profit: $97.60 (minus the $2.40 redemption fee)
Your 40 tokens are burned (no longer exist)
Why This System Works
The mint/redeem mechanism is what makes LTPs work like traditional ETFs, but with crypto-native benefits:
✅ Always fair pricing — Tokens trade at or near true portfolio value
✅ Transparent and verifiable — All portfolio holdings are visible onchain
✅ Efficient arbitrage — Market makers keep secondary prices aligned with NAV
✅ 24/7 operation — Unlike traditional ETFs that only price once per day, LTP NAV updates in real time
✅ Composable — LTP tokens can be used across DeFi (lending, trading, yield strategies)
What's Next?
Now that you understand how minting and redemption work, you can:
Trade LTPs confidently knowing that prices stay close to true value thanks to the mint/redeem mechanism.
Track NAV in real-time to see the exact value of the underlying portfolio.
Understand why LTPs are different from regular tokens — they're backed by real, verifiable assets with a built-in pricing mechanism.
Ready to learn more?
Explore LTPs on Lore: https://lore.xyz/ltp