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What are the different Collateralization Ratios? (GCR vs CR)
There are 2 types of Collateral ratios in UMA's system. Individual Collateral Ratios (CR) and a Global Collateral Ratio (GCR).
The Global Collateralization Ratio (GCR) is the average collateralization ratio across all token sponsors of a synthetic token, excluding those that have been liquidated. It is calculated by dividing the total collateral deposited by all token sponsors in the contract by the total number of outstanding synthetic tokens.
This is different from a Token Sponsor's own Collateralization Ratio (CR), which is determined by their specific ratio of Synths minted against collateral. Liquidations typically occur at Collateralization ratios of 125% or lower, but this can change from contract to contract, so be sure to check before minting.
The GCR is used to set collateralization requirements for new synthetic token issuance and to enable “fast” withdrawals.
Additionally, “slow” withdrawals are possible that bring your collateralization ratio below the GCR, but these undergo a review period prior to executing. https://docs.umaproject.org/synthetic-tokens/expiring-synthetic-tokens
Last modified 5mo ago
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