What Is the Collateralization Ratio for a Fully-Backed Wrapped Asset?

For a fully-backed wrapped asset, the collateralization ratio is 1:1, or 100%. This means that for every wrapped token minted on the destination chain, exactly one unit of the underlying asset is locked in the smart contract or by a custodian on the source chain.

This ratio is essential for maintaining the wrapped token's peg to the original asset's value. Deviations from 100% can indicate trust issues or market arbitrage opportunities.