# Collateral Ratios

Originally, the redeem function was suspended. A proposal to allow redemption CoUSD is up for vote as of June 21, 2022.
https://coffinfinance.medium.com/cousd-redeem-proposal-4e4417d84b90
https://snapshot.org/#/coffinfinance.eth/proposal/0x893abc649be05e5613a41dbc0885f7ae9a7d08fd9d955170feac7ccc082995a8

### 2 Type of Collateral Ratios.

There are 2 types of collateral ratios. There are Effective Collateral Ratio (ECR) and Target Collateral Ratio (TCR) .
The ECR is based on the actual collateral ratio. The TCR is just a target ratio based on historical CoUSD prices.
There various configurations, to successfully launch and keep the system, only the development team is responsible for maintaining and, and adjusting them. If you dislike, you are more than welcome to raise the issues and vote after governance is released.

### TCR for Minting

The system tries to peg CoUSD to be equivalent to \$1.00 USD, but the collateral ratios for minting and redemption are sometimes different.
Minting enables us to create new CoUSD tokens from FTM and COFFIN. The COFFIN token will be burned in this process, while the FTM will be used as collateral. The ratio depends on the current TCR by default. This ratio is updated every 60 minutes and up (by default) .
When updating the TCR, the system checks the current CoUSD value in USD. If the value is above peg, the TCR will slightly decrease. If the value is below peg, the TCR will slightly increase.

### ECR for Redeeming

CoUSD is entitled to the same percentage of collateral ratio, regardless of what collateral rates they were minted at. By default, the system uses the ECR as collateral ratio for redeeming.

### ECR Formula

The CoUSD consists of Collateral and COFFIN. The formula is as below.
$F = \overbrace{(Y*P_y)}^{\text{collateral value}} + \overbrace{(Z*P_z)}^{\text{COFFIN value}}$
$(1-C_r)(Y*P_y) = C_r(Z*P_z)$
$F$
is the units of CoUSD
$C_r$
is the collateral ratio
$Y$
is the units of collateral transferred to the system
$P_y$
is the price in USD of
$Y$
as collateral. We use FTM for
$Y$
.
$Z$
is the units of COFFIN
$P_z$
is the price in USD of COFFIN
$​Y = \dfrac{F*(C_r)}{P_y} ​$
$​Z = \dfrac{F*(1-C_r)}{P_z}$
$F$
is the units of CoUSD redeemed
$C_r$
is the collateral ratio
$Y$
is the units of collateral transferred to the user
$P_y$
is the price in USD of
$Y$
collateral
$Z$
is the units of COFFIN minted to the user
$P_z$
is the price in USD of COFFIN

### Oracle Prices

For TCR & ECR, the oracle price is not measured through use of TWAP, but the same system use for the realtime price by the SpookySwap Pair Contract.