Reserve Ratio

This allows for the best trading experience on FP.

Reserve Ratio FAQ

What is the Reserve Ratio?

It represents the proportion of NFTs available for redemption versus total deposited. It indicates the protocol's redemption capacity.

Total number of NFTs = Vault Deposits + Safeboxes [Not yet expired] Reserve Ratio = Vault Deposits / Total Number of NFTs If of 1000 NFTs deposited in FP, 650 are in the Vault, and 350 are in Safeboxes, the Reserve Ratio would be 65%.

How is it calculated?

By dividing the number of NFTs in the Vault by the total number deposited into the protocol.

Why is it important?

It enables managing redemption risks and maintaining μ-Token value stability.

What happens when it gets too low?

Safebox rental rates and redemption fees increase to discourage redemptions until reserves are replenished. If the ratio drops below 40%, dynamic $FLC fees will be incurred to redeem your NFTs from the Vault.

How do rental rates and fees relate to the ratio?

They dynamically increase as the ratio declines, discouraging redemptions.

How is μ-Token value stability maintained?

Arbitrage between μ-Token and NFT prices keeps them aligned, but sufficient vault reserves are required.