# CRR

**CRR** (**C**onstant **R**eserve **R**atio) - the percentage of the collateral value of the custom coin in total volume of the BIP reserve of this coin.

The Minter network is unique in that any user can create a custom coin and instantly exchange it for a BIP or any other coin on the network. Such instant liquidity became possible due to the fact that each coin is provided with a reserve in BIP. The reserve is created when the coin is issued; it increases when it is bought (emission) and decreases when it is sold (burning).

This approach determines the rate of any Minter coin to BIP by means of precise mathematical calculation. Knowing the parameters of the coin, which are in the public domain, users can be informed and make reasonable and profitable decisions.

## Example of CRR use

Using the coin KARMA as an example, let's see how it works.

On Minterscan you can see the following token parameters in the *Coins'* section:

- The cost is 46,472.9321 BIP;
- The total volume of 1 186,1402 coins;
- The total reserve is 5,512,648.4034 BIP;
- CRR 10%.

**Coin value excluding CRR** = Total reserve / Total volume = 5,512,648.4034 BIP / 1,186,1402 coins = 4,647.5521 BIP per coin

It turns out that 1 KARMA coin should cost 4,647.5521 BIP, but by performing this action the reserve in BIP can be identified, which provides the cost of each coin in the total amount.

Since the CRR is 10%, the higher the BIP reserve of one coin is only 10% of the current value of the coin. Therefore, in order to find out the Current Value, you need to divide the received reserve by CRR or:

**Current Coin Value** = Reserve in the BIP of one coin / (CRR / 100%) = (4 647,5521 BIP/ (10 / 100)) = 46,475.5214 BIP

You can also do the opposite - multiply the price by CRR and get a Reserve in the BIP of one coin:

**Reserve in BIP for one coin** = Current value of the coin * (CRR / 100%) = 46,472.9321 * (10 / 100) = 4,647.2932

In addition, such calculations can be made with a general reserve in BIP, for example:

**Current Coin Value** = Total Reserve / (CRR / 100%) / Total Volume = 5,512,648.4034 BIP / (10 / 100) / 1,186.1402 = 46,475.5212 BIP.

Thus, the CRR percentage can be expressed as a constant ratio of the reserve by dividing it by 100. If a coin has a CRR of 10%, the coefficient will be 0.1 (10/100), and coins with a CRR of 100% have a coefficient of 1 (100/100). The above calculations only serve to understand how the CRR parameter works. Calculations have an inaccuracy because formulas in the Minter network are not linear and they should be used for accurate calculations.

## Role of the CRR parameter

The CRR is the most important parameter for any coin in the Minter network and it is responsible for its price volatility.

The higher the constant reserve ratio, the less the difference between the value of the coin and the reserve that provides it. Accordingly, the higher the CRR, the less volatile the coin is. As a result, coins with a CRR of 100% are not subject to volatility - their price is constant and, conversely, coins with a minimum CRR of 10% are maximally exposed to it.

For the sake of clarity, let us consider 3 conditional coins: CRR100, CRR50 and CRR10 with the same parameters:

- Initial reserve – 1 000 BIP
- The initial issue – 1,000 coins

The difference will only be in the CRR parameter - 100%, 50% and 10%, respectively.

For the creator of such coins, each coin will cost him 1 BIP, but for the next buyers the difference will be enormous.

For the calculation we use the formula:

**Cost of buying 1 coin** = reserve * (((wantReceive + supply) / supply ^ (100 / crr)-1), where

Supply - total number of coins,

reserve - current reserve in BIP,

crr - Constant Reserve Ratio and

wantReceive - number of coins to buy.

**CRR100**1 000 * (((( 1 + 1 000) / 1 000 ^ (100 / 100)-1) =**1 000 BIP****CRR50**1 000 * (((( 1 + 1 000) / 1 000 ^ (100 / 50)-1) =**2,001 BIP****CRR10**1 000 * (((( 1 + 1 000) / 1 000 ^ (100 / 10)-1) =**10,045 BIP**

"Let's make a calculation to buy 1000 of these coins:

**CRR100**1 000 * (((( 1 000 + 1 000) / 1 000 ^ (100 / 100)-1) =**1 000 BIP**

Coin price does not change 1 BIP (1 000/1 000).

**CRR50**1 000 * (((( 1 000 + 1 000) / 1 000 ^ (100 / 50)-1) =**3 000 BIP**

Smooth price increase. Average cost per coin 3 BIP (3 000/1 000). The first coin after creation cost 2,001 BIP, and a thousandth 3,999 BIP.

**CRR10**1000 * (((( 1000 + 1000) / 1000 ^ (100 / 10)-1) =**1 023 000 BIP**

Sharp rise in price. Average cost per coin is 1 023 BIP (1 023 000/1 000). The first coin after creation cost 10,045 BIP, and the thousandth 5 108,495 BIP.

Each new coin purchased will be more expensive than the previous one and the difference in their value also depends on the CRR parameter. Thus, coins with a smaller CRR can bring the maximum benefit. If you buy a coin with a CRR of 10% for 10,045 BIP there is a chance that it can be sold for 5,108.495 BIP and the net profit will be 5,098.45 BIP (50,656.09%). However, the higher the volatility, the higher the risks. At sale cost of a coin will decrease in the same way as it grew at purchase.

For example, let's buy a conditional coin *CRR10'* for 5,108.495 BIP and imagine that out of the total issue of 2,000 coins will be sold by someone 500 pieces.

**To calculate the sale of 500 coins we use the formula**

**Calculation of the sale value of a custom coin** = reserve * (1 - (1 - sellAmount / supply) ^ (100 / crr)), where

Reserve - current reserve in BIP,

sellAmount - number of coins to be sold,

supply - total number of coins,

CRR - Constant Reserve Ratio.

**Calculation of the cost of selling a custom coin** = 1,024,000 * (1 -(1 -(1 - 500 / 2,000) ^ (100 / 10)) = 966,334.9609 BIP // Someone sold 500 coins

Now we can calculate how much we will get for selling our coins:

**Calculation of the sale value of a custom coin** = 56 665,0391 * (1 -(1 -(1 - 1 / 1 500) ^ (100 / 10)) = 383 BIP // We sold our coin

Here we see a significant loss of 4,725.495 BIP (5,108.495 - 383).

Thus, although CRR is the most important parameter for coins in Minter, it is not the basis for calculating the expected profits and return on investment(ROI) in a custom coin. It is necessary to consider the totality of all the parameters of a custom coin.