Suppose we open a Vault and add 1000 STX to the Vault as collateral, with STX being priced at 2 USD. This gives us a <Vault Value> of 2000 USD. The Liquidation Ratio for this Vault stands at 150%, which technically means we can mint up to 1333 USDA. A slight decrease in STX price will already flag our Vault for Auction, resulting in a 10% penalty when it gets Liquidated. To avoid this, we only mint 1000 USDA at a Collateralization Ratio of 200%. This means that STX can drop as low as 1.5 USD (a 25% price drop) until the Vault gets tagged for Auction. Note that this is still quite risky as daily 25% drops are known to happen. We advise caution and prudence, especially if you are new to these type of constructions.