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A collateral ratio is the rule that converts deposited collateral into usable payment capacity. If a wallet deposits $1,000 of eligible collateral, it should not automatically be able to promise unlimited payments. 4Mica needs to account for asset risk, settlement timing, open guarantees, pending validation, withdrawal requests, and the possibility that a debtor does not settle on time. The collateral ratio is the buffer between those facts. It answers one practical question:
How much value can this wallet safely guarantee before the protocol should stop accepting more exposure?
That answer matters to both sides of a payment. Buyers want as much usable capacity as possible from their collateral. Sellers want confidence that an accepted guarantee is backed by enough value to survive the clearing and settlement window.

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The basic idea

Collateral ratios are easier to understand if you separate three numbers:
NumberMeaning
Deposited collateralThe finalized asset value attributed to a wallet.
Credit capacityThe maximum value the protocol allows the wallet to guarantee from that collateral.
Locked exposureThe portion of capacity already reserved for unresolved guarantees or obligations.
Available capacity is what remains after policy and existing obligations are applied: 
available capacity = credit capacity - locked exposure
The credit capacity is usually lower than the raw deposit value: 
credit capacity = eligible collateral value × collateral factor
For example, if a deployment gives a supported stablecoin a 90% collateral factor, $1,000 of eligible collateral can support up to $900 of guarantees before other limits are considered. The remaining $100 is not a fee. It is a safety buffer.
Exact collateral factors are deployment-specific. Integrations should discover active configuration from the operator and should treat the examples on this page as mental models, not fixed production parameters.

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Why 4Mica needs a buffer

4Mica payments are designed to feel instant at the HTTP layer. A seller can serve a protected resource after Core accepts a signed guarantee, even though the final movement of funds may happen later through clearing, settlement, or a default path. That delay is what makes collateral policy important. If every dollar of collateral could be promised immediately, even a small delay or accounting mismatch could make sellers underprotected. A ratio keeps some margin inside the system so guarantees can remain credible while payments move through their lifecycle. The buffer protects against several ordinary conditions:
  • prices, decimals, and asset values being interpreted incorrectly
  • guarantees that remain open until a clearing cycle closes
  • V2 guarantees waiting on validation
  • pending withdrawals reducing future capacity
  • settlement windows where a debtor has not paid yet
  • defaults that must be covered from locked collateral
  • operational delays in event indexing or finality
The purpose is not to make every risk disappear. It is to make exposure explicit and bounded.

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Ratio, collateral factor, and overcollateralization

Different teams describe collateral policy in different ways. The same policy can be expressed as a collateral factor or as an overcollateralization ratio.
ExpressionExampleMeaning
Collateral factor90%Each $1 of collateral supports up to $0.90 of guarantees.
Overcollateralization ratio111.11%Each $1 of guarantees requires about $1.11 of collateral.
Required buffer10%A portion of the deposit remains outside usable capacity.
These are just different views of the same constraint. 
collateral factor = guarantee capacity / collateral value
overcollateralization ratio = collateral value / guarantee capacity
If the collateral factor is 80%, the system is more conservative. A $1,000 deposit supports $800 of guarantees. If the collateral factor is 95%, the system is more capital efficient, but there is less room for unexpected movement or delay. Neither number is automatically “better.” The right ratio depends on asset quality, settlement rules, risk tolerance, and how much uncertainty the protocol needs to absorb.

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What counts as eligible collateral

Not every token balance in a wallet counts toward 4Mica payment capacity. To become eligible, collateral must be deposited through the supported collateral flow, recognized on the correct network, and accepted by the active deployment. A token in the wallet, an allowance, or a pending transaction is not enough. For a deposited asset to contribute to capacity, Core needs to know:
RequirementWhy it matters
NetworkCollateral on one chain cannot automatically back guarantees on another chain.
Asset addressSymbols like USDC or ETH are not enough to identify the asset safely.
Decimal precisionAmounts are accounted in base units, not human-formatted decimals.
FinalityThe deposit event must be reliable enough for Core to use.
Deployment policyThe operator must support the asset and assign risk parameters.
Existing obligationsAlready accepted guarantees reduce remaining capacity.
See deposits and withdrawals for the full collateral lifecycle and supported networks for network guidance.

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How ratios affect a payment

When a payer signs a guarantee, Core checks more than the signature. It also checks whether the wallet has enough available capacity after the collateral ratio and existing locks are applied. The seller should treat Core acceptance as the important signal. A buyer may claim to have funds, but the guarantee is not useful until Core verifies the signed fields, policy, accepted version, and collateral. Read transaction lifecycle for how guarantees move from issuance through validation, netting, settlement, and default coverage.

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Locked exposure is not the same as spent money

When Core accepts a guarantee, it reserves capacity. That reservation is called locked exposure. It prevents the same collateral from backing too many payments at once. Locked exposure can resolve in different ways:
OutcomeWhat happens to capacity
Guarantee settles normallyThe obligation is paid through settlement and capacity unlocks.
Guarantee is cancelled or expires under protocol rulesThe reserved capacity can unlock.
V2 validation remains pendingCapacity stays reserved until the validation lifecycle resolves.
Debtor defaultsLocked collateral can be used to cover the eligible claim.
This distinction is subtle but important. A wallet may still own the collateral economically while capacity is locked. The wallet simply cannot reuse that same capacity for another guarantee or withdraw it as if nothing depended on it.

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Ratios and withdrawals

Withdrawals are constrained by the same capacity math. A wallet can only withdraw collateral that is not needed for accepted guarantees, pending settlement, validation-gated obligations, active withdrawal delays, or default coverage. If removing collateral would make the remaining position undercollateralized, the withdrawal should not be finalized. 
remaining eligible collateral × collateral factor
must be greater than or equal to
remaining locked exposure
For example, suppose a wallet has $1,000 in eligible collateral with a 90% collateral factor. Its maximum credit capacity is $900. If $600 is locked, the wallet has $300 of available capacity. If the wallet tries to withdraw $500, the remaining collateral would be $500, which supports only $450 of capacity at the same factor. That would be less than the $600 already locked, so the withdrawal would make the position unsafe. This is why a withdrawal may need to wait until obligations settle or unlock. The user still has a withdrawal path, but the protocol cannot allow collateral to leave while sellers are relying on it. See no custodial risk for how withdrawal ownership works without turning 4Mica into a custodial balance provider.

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Ratios and yield

4Mica can use yield-bearing infrastructure such as Aave for supported stablecoin collateral. That makes collateral productive while it backs payment capacity, but it does not remove the need for conservative ratios. Yield and collateral capacity answer different questions:
ConceptQuestion
YieldCan idle or locked collateral earn while it remains deposited?
Collateral ratioHow much payment exposure can that collateral safely support?
Yield may improve the economics of keeping collateral deposited, but the collateral still sits inside a risk system. The ratio must consider the asset, the protocol path, liquidity, timing, and default coverage. More yield does not automatically mean more safe credit capacity. Read earning yield for the economic purpose of keeping collateral productive.

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Asset quality changes the ratio

A stable, liquid, widely supported asset can usually support a higher collateral factor than a volatile or thinly traded asset. Even among stablecoins, different assets can carry different risks. The ratio may account for:
Risk inputWhy it affects capacity
Price stabilityVolatile assets need a larger buffer before settlement completes.
LiquidityCollateral is less protective if it cannot be converted or claimed reliably.
Smart-contract pathDepositing through another protocol adds dependency risk.
Network finalitySlower or less reliable finality increases timing risk.
Token behaviorPausable, upgradeable, rebasing, or non-standard tokens may need stricter treatment.
Oracle or valuation methodAny external pricing dependency can introduce stale or incorrect values.
ConcentrationToo much exposure to one asset, wallet, or counterparty can raise systemic risk.
The safest integration posture is to assume ratios can vary by asset and deployment. Do not build product logic that depends on one universal number.

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Netting makes ratios more efficient

Collateral ratios exist because individual guarantees create exposure. Netting reduces how much value ultimately has to move. If two participants owe each other throughout a cycle, the clearing system can settle only the net amount instead of moving value for every individual request. This is one reason 4Mica can support many small agent payments without forcing a blockchain transaction for each request. Netting does not eliminate collateral requirements. Sellers still need protection during the period before the net result is known and settled. The ratio defines how much unresolved exposure the protocol is willing to accept while waiting for that result. For more detail, read bilateral netting cycles and settlements.

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Capacity is not a spending budget

Available capacity tells a buyer what the protocol may accept. It does not tell the agent what it should buy. A wallet might have enough capacity to sign a payment, while the buyer’s own policy rejects it because the seller is unknown, the task is low value, the price is too high, the route is suspicious, or the daily budget has already been used. Keep these two layers separate:
LayerDecision
Protocol capacityCan this wallet back the guarantee under current collateral rules?
Buyer policyShould this agent authorize the payment for this task?
The wallet and collateral system make payment possible. Policy makes it intentional. See wallet for the relationship between agent, signer, policy, and collateral.

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Accepted capacity is the signal

A seller does not need to inspect the buyer’s raw deposit and calculate every internal policy rule itself. The seller needs a verifiable indication that the payment was accepted under the active protocol rules. In a 4Mica flow, that signal is Core accepting the guarantee and returning a certificate. The certificate means Core verified the signed payment fields and locked the required capacity for that obligation. This still leaves normal seller decisions outside the collateral ratio:
  • whether the buyer is allowed to access the resource
  • whether the requested work is legal and safe to serve
  • whether the payment amount matches the protected route
  • whether the seller accepts the facilitator and network
  • whether additional application-level authentication is required
Collateral ratios protect economic settlement. They do not replace product, abuse, or compliance controls.

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When capacity is insufficient

If a guarantee is rejected because capacity is insufficient, it does not always mean the wallet has no money. It may mean the deposit is pending, the asset is unsupported, too much capacity is already locked, a withdrawal is in progress, or the requested amount would exceed the ratio. Common causes include:
A transaction receipt is not always enough. Core must observe a finalized deposit event and update the wallet’s collateral state before the collateral can support guarantees.
Collateral on Base Sepolia does not automatically support a guarantee advertised for Base mainnet, and vice versa.
A wallet may have deposited one token while the seller requires another. Asset address and chain are the identifiers that matter.
Capacity can remain locked until settlement, validation, cancellation, or default handling finishes.
Even with enough total collateral, the guarantee may exceed the wallet’s available capacity after the collateral factor is applied.
Pending or finalized withdrawals can reduce the collateral available to back new guarantees.
The right response depends on the cause. The wallet may need to deposit more collateral, wait for obligations to resolve, switch networks, use the correct asset, or reduce the requested payment amount.

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Reading ratio information

Applications should avoid hard-coding collateral rules. The active deployment may change supported assets, accepted versions, validation registries, contract addresses, or other public parameters over time. At minimum, integrations should use:
  • GET /core/public-params for public contract, signing, guarantee, and validation configuration;
  • GET /core/tokens for supported token addresses, chains, and decimals;
  • the facilitator verification and settlement responses for whether a specific payment was accepted.
Where a deployment exposes additional collateral or account-state endpoints, use them as the source of truth for current capacity. If there is any mismatch between a local estimate and Core’s response, Core’s response wins.