Why Can $100 Mint Only 66?
Use a minimum collateral ratio to find the issuance ceiling and see why capital efficiency trades against safety buffer.
- Calculate the maximum issuance from collateral and a ratio
- Explain how overcollateralization absorbs price movement
- Separate an issuance ceiling from current circulating supply
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Use a minimum collateral ratio to find the issuance ceiling and see why capital efficiency trades against safety buffer.
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Think about these questions first.
Choose an answer before opening the explanation. You can add anything unexpected to your review list.
Q01Why can 150% collateral still be insufficient?＋
Collateral can gap down, and selling incurs slippage and liquidation cost. One hundred fifty percent is a buffer under volatility, liquidity, and oracle assumptions—not a permanent guarantee.
Issuing a stablecoin is not borrowing the full market value of collateral. The protocol must ask what remains if collateral falls or a price update arrives late. A minimum collateral ratio turns that question into an executable ceiling.
Why $100 can mint only about 66 tokens
Suppose each USD-LAB targets $1 and the minimum collateral ratio is 150%. If you deposit $100 of collateral, the theoretical maximum issuance is:
maxMint = collateralValue / targetPrice / 150%
= 100 / 1 / 1.5
≈ 66 USD-LAB
The remaining $50 is not idle capital. It is the buffer that absorbs price shocks, liquidation discounts, and trading friction.
COLLATERAL → USD-LAB
Put a one-dollar target stablecoin into a state machine and watch minting, price, redemption, and reserves define the stability boundary.
Deposit collateral, mint gradually, and find the 150% ratio ceiling.
- Wallet collateral
- 1,000
- Your USD-LAB
- 0
- Lost reserves
- 0
- Total redeemed
- 0
Supply is a protocol promise; reserves are the assets actually available at exit. Keep both on the same ledger.
Move the outside market, then choose when the oracle updates. Current deviation 0.00%.
Supply does not shrink automatically when reserves are lost. Apply loss, redeem part of the balance, and inspect coverage and exit capacity.
Deposit collateral, then mint USD-LAB. Target, market, and oracle prices are three different states.
- 01
USD-LAB created：target price 1.00 USD, minting must be backed by collateral.
Use the slider to return to an earlier step. Continuing from there replaces the later history with a new sequence.
Expand: how this step works
liabilityValue = supply × targetPrice
collateralRatio = reserveValue / liabilityValue
require collateralRatio >= minimumRatio
The protocol checks the ceiling when minting, but it must keep reading collateral prices afterward. Being allowed to mint does not mean the position stays safe forever; state changes with price and liability.
With $100 of collateral and a 150% minimum ratio, how many $1 stablecoins can theoretically be minted?
The state you carry forward
The issuance ceiling is the intersection of collateral price, target price, and risk buffer. Next, let the market price depeg and see what redemption and arbitrage can—and cannot—repair.