Stake-to-Pool Ratio

The relationship between the First Loss Capital Provider’s stake and the total capital in the pool define the stake-to-pool (STP) ratio:

$$stakeToPoolRatio = \frac{stakedCapital}{totalPoolCapital}$$

It is essential for the First Loss Capital Provider to maintain a healthy stake-to-pool ratio given that this ratio controls lending and unstaking. No new loans can be approved if the STP ratio falls below the Target Stake Percentage parameter. Furthermore, only the portion of the First Loss Capital Provider’s stake that results in an excess STP ratio can be unstaked.