Redemptions and TSD Price Stability

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How does TSD closely follow the price of USD? 
The ability to redeem TSD for AVAX at face value (i.e. 1 TSD for $1 of AVAX) and the minimum collateral ratio of 110% create a price floor and price ceiling (respectively) through arbitrage opportunities. We call these "hard peg mechanisms" since they are based on direct processes.
TSD also benefits from less direct mechanisms for USD parity — called "soft peg mechanisms". One of these mechanisms is parity as a Schelling point. Since Teddy Cash treats TSD as being equal to USD, parity between the two is an implied equilibrium state of the protocol. Another of these mechanisms is the borrowing fee on new debts. As redemptions increase (implying TSD is below $1), so too does the baseRate — making borrowing less attractive which keeps new TSD from hitting the market and driving the price below $1.
What are redemptions?
A redemption is the process of exchanging TSD for AVAX at face value, as if 1 TSD is exactly worth $1. That is, for x TSD you get x Dollars worth of AVAX in return.
Users can redeem their TSD for AVAX at any time without limitations. However, a redemption fee might be charged on the redeemed amount.
For example, if the current redemption fee is 1%, the price of AVAX is $500 and you redeem 100 TSD, you would get 0.198 AVAX (0.2 AVAX minus a redemption fee of 0.002 AVAX).
Note that the redeemed amount is taken into account for calculating the base rate and might have an impact on the redemption fee, especially if the amount is large.
Is a redemption the same as paying back my debt? 
No, redemptions are a completely separate mechanism. All one has to do to pay back their debt is adjust their Trove's debt and collateral.
How is the redemption fee calculated?
Under normal operation, the redemption fee is given by the formula (baseRate + 0.5%) * AVAXdrawn
How is the baseRate calculated?
Redemption fees are based on the baseRate state variable in Teddy Cash, which is dynamically updated. The baseRate increases with each redemption, and decays according to time passed since the last fee event - i.e. the last redemption or issuance of TSD.
Upon each redemption:
baseRate is decayed based on time passed since the last fee event
baseRate is incremented by an amount proportional to the fraction of the total TSD supply that was redeemed
The redemption fee is given by (baseRate + 0.5%) * AVAXdrawn
As a borrower, do I lose money if I'm redeemed against? 
If your Trove is redeemed against, you do not incur a net loss. However, you will lose some of your AVAX exposure. Your Trove's collateral ratio will also improve after a redemption.
How can I avoid being redeemed against? 
The best way to avoid being redeemed against is by maintaining a high collateral ratio relative to the rest of the Trove's in the system. Remember: The riskiest Troves (i.e. lowest collateralized Troves) are first in line when a redemption takes place.

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How does TSD closely follow the price of USD?

What are redemptions?

Is a redemption the same as paying back my debt?

How is the redemption fee calculated?

How is the baseRate calculated?

As a borrower, do I lose money if I'm redeemed against?

How can I avoid being redeemed against?