MCRs

MCRs or Minting Collateral Requirements, also dynamic in nature, directly impact the Seigniorage's Collateral Ratio (CR) by increasing/decreasing the amount of equity tokens needed to mint new stablecoins through it.

Therefore, they also influence the growth in protocol's debt (PUC).

• Credit/Debt Contraction (MCRs↑): Recollateralizaton

• Credit/Debt Expansion (MCRs↓): Decollateralization

If the Debt in the balance sheet (PUC) is increasing to the point that is catching up with Credit (ePOC), the protocol can raise MCRs to effectively stop the excessive debt expansion. If MCRs are sharply raised to 100% this means that the protocol doesn't accept Equity tokens for minting new stablecoins, while the Seigniorage's arbitrage remains in place and keeps working to eventually stabilize the peg under excessive buying pressure. Decollateralization can then, eventually be forced into Recollateralization through the help of IRs and the deployment of the RR. Viceversa, when the protocol is dropping MCRs, it means that the organic growth in its Credit reserves can justify a sustainable Debt expansion and Decollateralization.