Collateral ratios
IronFinance uses two ratios to influence the collateral ratio.

## Target Collateral Ratio (TCR)

The TCR is used by the minting function and it is displayed as a percentage. This ratio expresses what percentage of USDC or BUSD token is required to mint IRON token. TCR can increase or decrease every hour based on IRON price:
If the time-weighted average price of IRON token in the past hour is more than $1.00, then the protocol lowers the TCR. On BSC, it can be lowered by 0.25% (BSC) per hour. On Polygon, the percentage being dynamically managed to maintain protocol stability. If the time-weighted average price of IRON token in the past hour is less than$1.00, then the protocol increases the TCR.
Please note that these percentages can change in the future. The Iron Finance team is continuously focused on improving and optimizing the protocol stability.

## Effective Collateral Ratio (ECR)

ECR stands for Effective Collateral Ratio and it is shown in percentage. This percentage expresses the amount of USDC or BUSD token stored as collateral for the IRON token.
If the Target Collateral Ratio, or TCR is short is lower than ECR, then the protocol has excess collateral. TCR is usually lower than ECR when the demand for the IRON token is high and the price stays above the ideal $1.00 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 IRON token stays around and below the ideal$1.00 peg for an extended period of time.
The ECR is used in by the redeeming function.
$ECR=\frac{USDC-or-BUSD\ Collateral\ Value}{Total\ IRON\ Supply}$