Collateralisation ratio
Reserves & backingValue of collateral divided by value of outstanding tokens. Fiat-backed designs target ~100%; crypto-backed designs deliberately run well above it.
A crypto-collateralised token at 150% is not 'safer' than a fiat-backed token at 100% — the buffer exists because the collateral is volatile and must survive a drawdown plus liquidation slippage.
The number to watch is the buffer relative to the collateral's realistic one-day drawdown, and whether liquidation infrastructure can actually clear positions at that speed.
Anything under 100% is under-collateralised by definition and depends on confidence or an algorithmic mechanism to hold the peg.
Why it matters
The ratio tells you how far the collateral can fall before token holders take a loss.
Related terms
The machinery that holds the price at par: fiat redemption, over-collateralised crypto vaults, delta-neutral hedges, or algorithmic supply control.
What the issuer actually holds against outstanding tokens: T-bills, overnight repo, bank deposits, commercial paper, crypto collateral, or a mix.
A sustained, material break from the reference value — not a momentary wick. Usually defined as trading beyond a threshold (commonly 0.5%) for a meaningful period.