Collateral Ratios

Collateral Ratios

Inertia Finance uses two ratios to influence the collateral ratio.

Target Collateral Ratio (TCR)

TCR stands for Target Collateral Ratio and it is shown in percentage. This ratio expresses what percentage of USDC or BUSD token is required to mint TIA token.

If the time-weighted average price (TWAP) of TIA token in the past hour is more than $1.00, then the protocol lowers the TCR by .42%.

If it is less than $1.00, then the protocol increases the TCR by 0.42%.

TCR can increase or decrease by a maximum 0.416% per hour, subject to a daily maximum increase or decrease of 10.00%.

The TCR is used by the minting function.

Current Collateral Ratio (CCR)

CCR stands for Current Collateral Ratio and it is shown in percentage. This percentage expresses the amount of USDC or BUSD token stored as collateral for the TIA token.

If the Target Collateral Ratio, or TCR is short is lower than CCR, then the protocol has excess collateral. TCR is usually lower than CCR when the demand for the TIA token is high and the price stays above the ideal $1.00 peg. If the TCR is higher than the CCR, then the protocol has no excess collateral. TCR is usually higher than the CCR when the price of TIA token stays around and below the ideal $1.00 peg for an extended period of time.

The CCR is used in redeeming function: