---
description: >-
  Hex One offers 100% collateral ratio, which means you can mint every
  dollar-value you put in (minus the fee). Collateral Ratio = Health Ratio
---

# 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.&#x20;
{% 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.&#x20;

The health ratio should never go below 250%, to keep the position safe from liquidations.&#x20;

## Starting point: Overcollateralized Vault

According to our [calculations](../basics/how-usdhex1-peg-works), 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.&#x20;

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.&#x20;
