Collateral Tokens are specific external ERC20 contracts with strong pegs to 1 USD. They serve three primary functions - minting oneTokens, redeeming oneTokens, and Collateral Ratio calculation.
Collateral Tokens are accepted and emitted in the Minting and Redemption processes. 0-n stablecoins are accepted in tandem with Project Token at a specific ratio, the Minting ratio, by the oneToken Vaults. Upon redemption of oneTokens, oneToken Vaults burn the oneTokens in return for stablecoins of equal value (Collateral Tokens) minus the redemption fee. Since more than one kind of stablecoin can exist in the oneToken Vault at any given time, multiple stablecoin options are always offered on a “while supplies last” basis.
Collateral Tokens are owned by the oneToken Vault. Admission of Collateral Tokens is up to ICHI Governance which administers the oneToken Vault and enforces boundaries over oneToken deployments.