Risks
Lastly, it's important to note that VuFi is an agnostic protocol. It makes no assumptions about what collateral ratio the market will settle on in the long-term. It could be the case that users simply do not have confidence in a stable coin with 0% collateral that's entirely algorithmic. The protocol does not make any assumptions about what that ratio is and instead keeps the ratio at what the market demands for pricing VuFi at the current inflation rate of the US Dollar. It could be the case that the protocol only ever reaches, for example, a 60% collateral ratio and only 40% of the VuFi supply is algorithmically stabilized while over half of it is backed by collateral. The protocol only adjusts the collateral ratio as a result of demand for more VuFi and changes in its price.
Last modified 1yr ago