Crypto Glossary

Winding Down

Winding down is the process of unwrapping tokens back to their original form in DeFi.

What Is Winding Down?

In decentralized finance (DeFi), winding down is the process of unwrapping tokens back to their original form, which involves multiple platforms as well as other tokens.

For example, if a user is holding $fSNOW and wants to return it to its original form of $USDC, they will need to go through several complex steps.

First, the user will need to take $fSNOW from the Snowswap exchange and redeem it for $fUSDC on a platform like Harvest Finance, an automated yield farming protocol. From there, they will be able to exchange $fUSDC for $USDC.

In other words, the difference between winding down and a simple token unwrapping is that the former involves multiple tokens along the way, while the latter is an action that typically involves the usage of just two tokens.

Author: Harvest Collective.

‍Harvest Finance is a cooperative yield farming protocol on the cutting edge of decentralized finance. Harvest automatically farms the highest yields available by relentlessly developing new farming strategies, and pools deposits to lower gas costs for individual users.

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