# USDr Stablecoin

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**Good to know:** $USDr (stablecoin) and $RATIO (SPL governance token) are the 2 tokens associated with the protocol.
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**Definition**

$USDr is a Ratio-issued over-collateralized stablecoin soft-pegged to US Dollar. $USDr is backed by a growing basket of crypto assets, starting with a stablecoin-stablecoin Liquidity Pool (LP). $USDr is the first algorithmically risk-adjusted Collateralized Debt Position (CDP). Users can mint $USDr against LP collateral with a collateralization ratio, dynamically adjusted based on the calculated risk of the underlying assets.

**$USDr Tokenomics**

Over the long-run, $USDr token economics are guided by a few key forces. These forces influence the supply and demand curve for $USDr. 

**Forces Influencing Demand** 

The demand for $USDr tokens on the open market will come from a few sources.

1. **Desire for stability.** DeFi users need to be able to trade into stable assets with ease, which will drive demand for a well-designed, decentralized stablecoin like $USDr. $USDr acts as a proxy for risk assessment on a diversified basket of yield-bearing stable assets. It is a negative interest form of debt because it is backed by assets that gain yield and avoid volatility.  
2. **$USDr repayment.** Users mint $USDr against crypto-assets in their Ratio vaults. In order to unlock their assets from the vault, they need to return their $USDr to Ratio. They may have to buy $USDr off the open market to do so.
3. **Peg Stability Module (to come).** $USDr is a stablecoin soft-pegged to the U.S. Dollar. In order for the value of 1 $USDr to stay as close to the value of 1 USD, people need confidence that the exchange rate is consistent and reliable. To evoke that confidence, we are creating a peg stability module. The peg stability module is essentially a direct swap between a user's wallet and Ratio's treasury such that 1 $USDr can always been redeemed for 1 $USDC at any time, and vice versa. 
4. **$USDr-based financial products (to come).** Ratio's larger vision is to create risk-adjusted financial products using $USDr. As Ratio makes $USDr-based financial products available to be bought and sold, this will generate additional demand for $USDr. 

**Forces Influencing Supply**

Outside of the normal release of tokens into Ratio's treasury and distributions to its team and investors, there are two sources of supply of $RATIO tokens on the open market.

1. **Desire for volatility.** $USDr is a stablecoin. If the market decides it wants more exposure to volatile assets, it may sell $USDr to buy them.
2. **$USDr creation.** Whenever a user adds collateral to their Ratio vault and mints $USDr, this increases the supply of $USDr.
3. **Peg Stability Module.** Because the peg stability module works both ways - meaning users can swap 1 $USDr for 1 $USDC or 1 $USDC for 1 $USDr - a net positive amount of $USDr could be created.
4. **$USDr-based financial products (to come).** Each $USDr-based financial product that is minted increases the supply of $USDr.

**As you can tell, these forces are designed to be largely balanced. This is meant to support the steady and sustainable growth of $USDr over time.**