Reserve Ratio

The Reserve Ratio represents the proportion of Inscriptions readily available for redemption relative to the total number deposited into the Ordi Launch. It provides insight into the Ordi Launch's capacity to redeem outstanding μ-Tokens.

How Reserve Ratio is Calculated: A higher ratio indicates the vault holds sufficient reserve Inscriptions to cover μ-Token redemptions. To maintain a healthy Reserve Ratio, redemption fees and Safebox rental rates are dynamically adjusted based on the current ratio. This deters excessive redemptions and encourages restoring the ratio when it declines. This ratio is key to stability.

Maintaining μ-Token Value: Arbitrage opportunities are utilized by market participants to stabilize μ-Token value. For instance, if the price of an Inscription becomes cheaper than 1 million μ-Tokens, buyers can profit by depositing that Inscription and selling the μ-Tokens, and vice versa. This realigns the μ-Token price.

Arbitrage ensures μ-Token prices stay aligned with the broader Inscription market.

Dynamic Rental Rates and Fees: Safebox rental rates and redemption fees fluctuate based on the current Reserve Ratio. Lower ratios lead to increased rental rates and fees, discouraging redemptions while the Ordi Launch restores reserves, thereby maintaining system stability.