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The Vectorize Image function turns a Rastor (Image) into a Vector (Cuttable Format).
In the Design Editor it can be saved as a Deboss, Pen or cut in Vinyl.
In Trace it can also be saved as a cuttable CutArt.
Note that the Vectorizing utility in Trace has additional parameters that can be adjusted if you need more control of how an image is Vectorized.
Raster to Vector Conversion