Floor Protocol
  • INTRODUCTION
    • Getting Started
    • Overview
    • Our Mission
    • Goals and Solutions
  • $FLC Token
    • NFT Index Token
    • Utility
    • Liquidity Provision
      • UniSwap
    • Tokenomics
    • VIP Tiers
      • Safeboxes by VIP Tiers
  • BT404
    • Introduction
    • P2P Marketplace
    • Ownership 1.0
  • Features
    • NFT Fractionalization
      • Vault
        • Reserve Ratio
        • NFT Redemption
          • Insecure Randomness
          • Dynamic Fees
      • Safebox
        • Safebox Keys
        • Using Safeboxes
        • Renewing Safebox Keys
        • Safebox Expiration
      • NFT Value by DeepNFTValue
    • µ-Tokens
    • Staking
    • Launchpad
    • Auctions
    • Floor Account
  • Security
    • Audit By Halborn
    • Audit By OtterSec
  • Math
    • Reserve Ratio
    • NFT Trading Efficiency
  • Policies
    • Privacy Policy
    • Cookies Policy
    • Terms Of Use
      • Restricted Regions
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  • Maintaining μ-Token Value
  • Dynamic Rental Rates and Fees
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  1. Features
  2. NFT Fractionalization
  3. Vault

Reserve Ratio

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Last updated 1 year ago

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

A higher ratio indicates the vault holds sufficient reserve NFTs 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 the key to stability.

Maintaining μ-Token Value

Arbitrage opportunities are harnessed by market participants to stabilize μ-Token value. For example, if the Price of an NFT becomes cheaper than 1 million μ-Tokens, buyers can profit by depositing that NFT and selling the μ-Tokens and vice versa. This brings the μ-Token price back in line.

Arbitrage ensures μ-Token prices remain aligned with the broader NFT market.

Dynamic Rental Rates and Fees

Safebox rental rates and redemption fees fluctuate based on the current Reserve Ratio. Lower ratios increase rental rates and fees, discouraging redemptions while the protocol restores reserves. This maintains system stability.

How Reserve Ratio is Calculated