Collateral Ratio

In IRON protocol, we use 2 different collateral ratios:

1. Target Collateral Ratio(TCR)

Target Collateral Ratio (TCR) represents the Collateral Ratio the protocol continuously tries to achieve.

• The TCR will be used in the IRON Minting formula (see Minting).

• The protocol adjusts the TCR according to IRON's market price. When the IRON price is above $1 the protocol lowers the ratio so that less collateral will be required to lock up. When the price of IRON is below $1 the protocol increases the ratio.

• The protocol adjusts the TCR (Target Collateral Ratio) once every hour, by a step of 0.25%. The maximum change in TCR will not be more than 0.25% per hour or 6% per day.

2. Effective Collateral Ratio(ECR)

Effective Collateral Ratio (ECR) represents the ratio between the total value of collateral assets and the total value of IRON tokens in circulation.

• ECR will be used in the IRON Redeeming formula (see Redeeming).

• The main reason to use ECR instead of TCR in Redeeming is to make sure with every IRON token redeemed, there will be an equivalent value of collateral tokens and STEEL tokens in return.

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