# Decentralization Ratio (DR) The Frax Decentralization Ratio (DR) is the ratio of decentralized collateral value over the total stablecoin supply backed/redeemable for those assets. Collateral with excessive off-chain risk (i.e. fiatcoins, securities, & custodial assets such as gold/oil etc) are counted as 0% decentralized. The DR goes through underlying constituent pieces of collateral that a protocol has claims on, not just what is inside its system contracts. The DR is a recursive function to find the base value of every asset. For example, FRAX3CRV LP is 50% FRAX so remove that, as you cannot back yourself with your own coin. The other half is 3CRV which is 33% USDC, 33% USDT, and 33% DAI. DAI itself is about 60% fiatcoins. So each $1 of FRAX3CRV LP only has about $.066 ($1 x 0.5 \* 0.33 \* 0.4) of value coming from decentralized sources. In contrast, Ethereum, as well as reward tokens like CVX and CRV, are counted as 100% decentralized. FRAX minted through Lending AMOs also counts as decentralized since borrowers overcollateralize their loan w/ crypto sOHM, RGT, etc. This is the same reason DAI's vaults give it high DR. The DR is a generalized algorithm that can be used to compute any stablecoin's excessive off-chain risk. Other stablecoins like LUSD are much easier to calculate: their DR is 100%. FEI is around 90% DR. For a list of assets backing FRAX, see [Frax Facts](https://facts.frax.finance/frax/balance-sheet). --- # 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.frax.finance/amo/decentralization-ratio-dr.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.