Redemption
Returning a token to its issuer in exchange for the asset it represents, such as receiving dollars for a stablecoin.
Redemption is the primary market: tokens are destroyed and the corresponding assets are released, in contrast with the secondary market where tokens simply change hands on an exchange. Issuers usually restrict direct redemption to verified institutional clients, apply minimum sizes and fees, settle only during banking hours, and reserve the right to suspend the process under their terms of service. This channel is what anchors the market price, because approved parties can profit by redeeming when the token trades below par and by minting when it trades above. When the channel narrows or pauses, the market price is free to drift, which is the mechanism behind most temporary deviations.
In practice
An institutional client redeeming a large stablecoin balance receives a bank transfer while the tokens are permanently destroyed, which reduces the reported supply.
The common misunderstanding
Most holders never redeem directly; they sell on an exchange, which is why the traded price can move away from par when redemption is slow or restricted.