# Redemptions Model

The Keiko Protocol's Vault redemption model ensures that KEI stablecoin maintains its peg by allowing 1:1 redemption of KEI for the collateral held in Vaults, albeit with an associated fee. This feature is crucial for maintaining the price stability of KEI and providing a fail-safe mechanism for holders.

### Redemption Mechanism 

**1:1 Redemption**: Anyone can redeem KEI 1:1 for the collateral in any Vault, subject to a transaction fee. This mechanism is designed to ensure that KEI never falls below its target price.

#### Calculation of Redemption Priority

* **Nominal Collateral Ratio (NCR)**: This is calculated as the Collateral value divided by the Debt value for each vault.

$$
NCR = Collateral / Debt
$$

* **Minimum Collateral Ratio (MCR)**: Each vault has an MCR defined, which is critical for determining its financial health.
* **MCR Factor**: A parameter used to tweak the weight of the MCR Component.
* **MCR Component**: This is derived by multiplying the vault’s MCR by the mcrFactor.

$$
MCR Component = mcrFactor \* MCR
$$

#### Adjusted Redemption Score (ARS)

$$
ARS = NCR + mcrComponent
$$

* The ARS for each vault is calculated by adding the Nominal Collateral Ratio (NCR) to the MCR Component.
* The ARS determines the order in which vaults are redeemed; the vault with the lowest ARS is given priority in redemption.
* Vault owners can increse their ARS by increasing their NCR and their MCR