To ensure the protocol remains backed by sufficient collateral, stakers are incentivized to maintain their Collateralization Ratio (C-Ratio) at the target level. If the value of XDC or PLI fluctuates, the staker's C-Ratio will adjust accordingly. If it drops below the target C-Ratio (with a small buffer for minor fluctuations), the staker will be unable to claim rewards until they restore their ratio.

Stakers can manage their C-Ratio by minting additional xdUSD if their ratio exceeds the target, or by burning xdUSD if their ratio falls below the target.