> ## Documentation Index
> Fetch the complete documentation index at: https://docs.stratareserve.co/llms.txt
> Use this file to discover all available pages before exploring further.

# Collateral & Peg

> How srUSD maintains its peg through an autonomous, contract-level redemption floor.

srUSD's stability does not rely on market psychology or discretionary
intervention. It rests on a **contract-level, autonomous, permissionless price
floor** — the same mechanism class as a collateralized stablecoin, not an
algorithmic one.

## The redemption floor

Strata maintains a **USDC Redemption Pool** (the Strata Redemption Mechanism, or
SRM) that creates an autonomous floor at approximately **\$0.997** — one minus the
0.3% minimum redemption fee.

This is mechanistically similar to how Liquity's redemption creates a floor near
\$0.995, with one deliberate difference: the redemption pool has a **finite,
explicitly-sized capacity** rather than drawing on all collateral.

## How the arbitrage loop works

<Steps>
  <Step title="srUSD trades below peg">
    Suppose srUSD trades at \$0.996 on a secondary market.
  </Step>

  <Step title="Arbitrageurs buy the discount">
    Anyone can buy srUSD below \$1 and redeem it through the pool for USDC at the
    floor price, capturing the spread.
  </Step>

  <Step title="Buying pressure restores the peg">
    That redemption demand removes srUSD from circulation and pushes the market
    price back toward \$1 — permissionlessly, without anyone deciding to
    intervene.
  </Step>
</Steps>

<Info>
  The floor is **autonomous and permissionless**: it is enforced by the contract,
  available to anyone, and does not depend on a treasury choosing to act.
</Info>

## Collateral ratios

srUSD is over-collateralized, with ratios scaled to each asset's liquidity and
duration:

| Asset type      | Collateral ratio |
| --------------- | ---------------- |
| Vaulted silver  | 125–150%         |
| Gold            | 150–200%         |
| Royalty streams | 500–800%         |
| Private credit  | 600–1000%        |

Less-liquid or longer-duration collateral carries a higher ratio to absorb
valuation uncertainty.

## Residual risk

The redemption pool is finite by design. Under extreme, sustained redemption
pressure that exhausts pool capacity, the autonomous floor weakens and the peg
leans more on collateral liquidation and treasury depth. Pool capacity, fees, and
collateral parameters are governed by the Risk Committee and are part of the
protocol's active risk management.

<Card title="Governance & the Risk Committee" icon="scale-balanced" href="/protocol/governance">
  Who sets collateral eligibility, ratios, and redemption-pool parameters.
</Card>