In DeFi, winding down refers to the procedure of removing tokens from their wrapping and returning them to their original form, which involves several different platforms and additional tokens.
For instance, if a user has $fSNOW and wants to convert it back to $USDC, they will have to go through a number of difficult steps. Prior to redeeming $fSNOW for $fUSDC on a platform like Harvest Finance, the customer must first withdraw $fSNOW from the Snowswap exchange. They will then be able to convert $fUSDC into $USDC.
The difference between winding down and a straightforward token unwrapping is that the former uses several tokens along the route, whilst the latter usually only uses two tokens.