mkUSD Collateralization Ratio

Overview

This indicator monitors the total debt in Prismas mkUSD markets calculated by the minting of mkUSD stablecoin to its deposits used as collateral backing it. It ensures that mkUSD is overcollateralized at all times to sustain its intended $1 peg.

The indicator is calculated as the ratio of the number of mkUSD tokens minted from the protocol to the total value of its deposits (in USD) used as collateral backing it.

How can I use it?

Monitoring this ratio is essential to maintain the stability and credibility of mkUSD. If the collateralization falls below a certain level, it could threaten the $1 peg, leading to loss of trust and potential market disruptions. Maintaining overcollateralization is key to ensuring stability and integrity in the associated ecosystem.

The stablecoin industry often requires collateralization to ensure that tokens maintain a stable value. In the case of mkUSD, keeping track of the overcollateralization ensures that the token continues to sustain its intended $1 peg, making this indicator an essential tool for risk management and operational oversight.