Collateral Ratio

There are two types of Collateral Ratio:

• Individual Collateral Ratio (ICR): The ratio of collateral to debt for any individual miner.
• Total Collateral Ratio (TCR): The ratio of all collateral and assets to all debt for the protocol.

At any time, mining providers are obliged to maintain a healthy ICR or the collaterals will be liquidated; to do so, mining providers can stake more collaterals or repay debts; you can use mCKB or CKB to repay at 1% fee or directly mine to the protocol. By mining directly to repay or collateral, you enjoy a 0% fee.

And there are three thresholds defining the health of collateralization:

• Healthy Collateral Ratio (HCR): The standard for ICR to be healthy (M2) and earn $COMINE.
• Critical Collateral Ratio (CCR): Threshold for becoming unhealthy and critical in Recovery Mode.
• Liquidation Collateral Ratio (LCR): The bottom line for ICR under which a mining schedule is fully liquidated and collateral plus debt are transferred to the treasury with the liquidation reserve.

Recovery Mode

• Individual Recovery Mode: When ICR < CCR, the miner will enter recovery mode;
  • Actions that would lower ICR will be blocked;
  • Would be first targeted for redemption;
  • Extra interest rates apply;
• Global Recovery Mode: When TCR < CCR, the protocol will enter global recovery mode;
  • Actions that would lower ICR/TCR will be blocked;