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# Collateral ratios

## TCR

TCR stands for Target Collateral Ratio and it is shown in percentage. This ratio expresses what percentage of USDC token is required to mint UPFI token.
E.g., if the time weighted average price of UPFI token in the past minute is more than $1.00, then the protocol lowers the TCR by 0.25%. If it is less than$1.00, then the protocol increases the TCR by 0.25%. TCR can increase or decrease by maximum 0.25% per hour and maximum 20.00% per day.
Example: If TCR is 75%, then the user needs to provide 75% USDC token and 25% UPS token to mint UPFI token.

## ECR

ECR stands for Effective Collateral Ratio and it is shown in percentage. This percentage expresses the amount of USDC token stored as collateral for the UPFI token. If the Target Collateral Ratio (TCR) is lower than ECR, then the protocol has Excess Collateral. TCR is usually lower than ECR when the demand for the UPFI token is high and the price stays above the peg. If the TCR is higher than the ECR, then the protocol has no Excess Collateral. TCR is usually higher than the ECR when the price of the UPFI token stays around and below the peg to 1\$ for an extended period of time.
$ERC = {USDC \over UPFI}*100\%.$
Example: If you would like to redeem 1,000 UPFI tokens and the ECR percentage is 85%, then you should receive 850 USDC token and 150 USDC worth of UPS token.