# Collateralization Ratio

The collateralization ratio represents the extent to which the issuer's reserves back the circulating USDO tokens. A 100% collateralization ratio means that OED has sufficient reserves to allow redemptions of all USDO tokens at par value of $1, ensuring that each token is fully backed by the issuer's reserves. This ratio provides transparency and assurance to users that the value of USDO is supported by real assets, mitigating risks and maintaining stability. The collateralization ratio is determined using the following formula:

```
collateralizationRatio = Net Asset Value Of Issuer's (OED) Reserves / USDO tokens in Circulation

```

USDO's collateralization ratio can be found here on our transparency dashboard:

{% embed url="<https://openeden.com/usdo/transparency>" %}

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