> For the complete documentation index, see [llms.txt](https://docs.redemptiontoken.com/llms.txt). Markdown versions of documentation pages are available by appending `.md` to page URLs; this page is available as [Markdown](https://docs.redemptiontoken.com/how-to-earn/redemption-bonds/technical-specifications/issuance-of-redemption-bonds.md).

# Issuance of Redemption Bonds

To manage the issuance and redemption of Redemption Bonds, a smart contract will be deployed on the Ethereum blockchain. The smart contract will have functions for issuing new bonds, redeeming bonds, and managing the collateral pool.

When a new bond is issued, the smart contract will calculate the required amount of collateral based on the denomination of the bond. The formula for calculating the required collateral is:

| **requiredCollateral = bondDenomination / (1 - collateralizationRatio)** |
| ------------------------------------------------------------------------ |

Where bondDenomination is the face value of the bond and collateralizationRatio is the ratio of collateral to bond value (e.g., 1.0 for a 100% collateralization ratio).<br>