# Peg stability Overview Peg stability is the number one criteria to create trust and confidence in RoeUSD. Monroe implements a number of soft and hard mechanisms to maintain the peg. #### Over-Collateralization and Liquidations Monroe USD vaults are overcollateralized. When the Loan-To-Value (LTV) decreases below a threshold, vaults can be liquidated: liquidators are incentivized to come and repay debt in exchange for its value in collateral with a fee that starts from 2% and increases linearly to 10% for collateral ratio between 150% soft liquidation to 120% hard liquidation. Since at any time the value of the debt is lower than the value of the collateral in the vaults, the protocol is always solvent. Monroe accepts various types of token collateral across various chains. The protocol uses a discretionary formula to determine the minimum LTV required for different tokens based on a multitude of factors such as token on chain liquidity, token market cap, token yield generation mechanisms, availability of oracle feeds. Each collateral type is segregated. Each collateral type can have different protocol parameters based on protocol risk assessment. #### Hard Redemption Mechanism Any user can at any time redeem some amount of stablecoin for its value in collateral less a fixed fee of 0.5%. If the price of Monroe RoeUSD goes below $0.995, arbitragers can buy 1 Monroe RoeUSD on the open market and redeem it for $0.995 equivalent in collateral. When the price of RoeUSD is below the peg, it incentivises arbitrageurs to buy the token and redeem it for a profit, thereby bringing the RoeUSD price closer to $1. --- # Agent Instructions: Querying This Documentation If you need additional information that is not directly available in this page, you can query the documentation dynamically by asking a question. Perform an HTTP GET request on the current page URL with the `ask` query parameter: ``` GET https://docs.monroeprotocol.com/concepts/peg-stability-overview.md?ask= ``` The question should be specific, self-contained, and written in natural language. The response will contain a direct answer to the question and relevant excerpts and sources from the documentation. Use this mechanism when the answer is not explicitly present in the current page, you need clarification or additional context, or you want to retrieve related documentation sections.