> For the complete documentation index, see [llms.txt](https://docs.wombat.exchange/llms.txt). Markdown versions of documentation pages are available by appending `.md` to page URLs; this page is available as [Markdown](https://docs.wombat.exchange/concepts/coverage-ratio.md). # Coverage Ratio While other AMM uses the number of tokens to determine the exchange rate, Wombat introduces its innovation of using an **asset-liability management** model to price assets. The coverage ratio $$r\_x$$of an asset refers to the pool's ability to cover its debt payment. Each stablecoin in a pool has its coverage ratio. $$ coverageRatio\_x (r\_x) = \frac{Cash\_x}{Liability\_x} $$ Liquidity provided to the protocol would become a **liability​**. When users deposit and withdraw, liability changes, respectively. **The asset** of token x is the amount of cash in the liquidity pool. Generally speaking, an asset of higher coverage indicates a lower default risk, and actions that increase the coverage ratio of a token are incentivized. {% embed url="" %} --- # Agent Instructions This documentation is published with GitBook. GitBook is the documentation platform designed so that both humans and AI agents can read, navigate, and reason over technical content effectively. Learn more at gitbook.com. ## 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.wombat.exchange/concepts/coverage-ratio.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.