# Collateral Ratio {% hint style="info" %} **TLDR:** the collateral ratio is the health ratio. It measures how healthy a position is. If the collateral ratio drops below 250%, a position may be liquidated. {% endhint %} ## T-Shares = Scarcity T-shares are future HEX payments and they become harder and harder to mint, as time goes by as less HEX is available. Not only that, but T-Shares adjust to the number of participants, which means the more depositors, the harder it is to acquire a full T-share. ## Collateral Ratio When users deposit T-shares, the total HEX1 borrowed matches the value of the present HEX. But the vault counts T-shares as future HEX payments, thus giving the borrower a nice cushion that protects the position against liquidations. The health ratio should never go below 250%, to keep the position safe from liquidations. ## Starting point: Overcollateralized Vault According to our [calculations](/hex-one-protocol/basics/how-usdhex1-peg-works.md), the vault will contain the following collateralization ratios due to the native HEX yield: | Collateralization | 15 Years (MAX) | | ----------------- | -------------- | | Base | 508% | | HEX/DAI < 50% | 254% | | HEX/DAI > 50% | 761% | This means that if HEX drops 50%, the vault continues to be 254% overcollateralized. In other words, HEX would need an over 50% drop for the vault to be below 250% collateralization. This is assuming all hex stakes have claimed the maximum amount of HEX1 stablecoin, per stake created. Oppositely, if HEX increases 50% the vault automatically increases the collateralization to 761% until depositors mint HEX1 to satisfy the delta between the price change. --- # Agent Instructions: Querying This Documentation If you need additional information that is not directly available in this page, you can query the documentation dynamically by asking a question. Perform an HTTP GET request on the current page URL with the `ask` query parameter: ``` GET https://learn.hex1.club/hex-one-protocol/tokenomics/collateral-ratio.md?ask= ``` The question should be specific, self-contained, and written in natural language. The response will contain a direct answer to the question and relevant excerpts and sources from the documentation. Use this mechanism when the answer is not explicitly present in the current page, you need clarification or additional context, or you want to retrieve related documentation sections.