Collateral Ratio

What Is Collateral Ratio?

The collateral ratio in your vault represents the relationship between the Dollar value of your collateral and the debt in $AXUSD. This ratio will vary as the collateral price fluctuates. You can impact this ratio by adjusting the collateral and/or debt in your vault, such as adding more collateral or reducing your debt.

What Is The Minimum Collateral Ratio and Recommended Collateral Ratio?

The minimum collateral ratio, is the lowest ratio of debt to collateral that won't lead to liquidation in regular operations, dubbed Normal Mode. This ratio is typically set at 110%. For instance, if your vault has a debt of $10,000 $AXUSD, you'd need at least $11,000 worth of collateral to prevent liquidation. To steer clear of liquidation during Recovery Mode, it's advisable to maintain a ratio comfortably above 130%, ideally around 180% or even better, 200%.